Inflation Data Deflate Stocks at the Open
08/14/08 - 09:44 AM EDT
Mike Taylor
Updated from 8:59 a.m. EDT
U.S. stocks opened lower Thursday as the release of demoralizing inflation numbers, a rising home-foreclosure rate and a high unemployment number threw cold water over investor sentiment. The Dow Jones Industrial Average slipped 40 points to 11,493, and the S&P 500 fell 6.5 points to 1279. The Nasdaq stumbled 6 points to 2422. On Wednesday, the major indices spent nearly all day in negative territory, pounded by somewhat discouraging retail sales data and an uptick in crude-oil prices. Ahead of the new session, several economic data releases served to dampen investor enthusiasm. The Bureau of Labor Statistics' July consumer price index showed a 0.8% increase, down from 1.1% in June but much higher than economists' expectations for a 0.4% bump in prices. Year over year, prices rose 5.6%, the largest such increase since January 1991. The core inflation rate came in at 0.2%, less than 0.3% in June and in line with consensus estimates. Real estate data compiler RealtyTrac also said that foreclosures in the U.S. rose 55% year over year to 272,000 homes in July. It also reported that more than 77,000 homes were repossessed in the same period. Offering further selling pressure, the Department of Labor's initial jobless claims for the week ended August 9 came it at 450,000, a higher unemployment reading than forecast by analysts. The figure for the previous week was revised upward to 460,000 from 455,000. Before the data release, traders had shown optimism on Wal-Mart's report of second-quarter earnings that beat estimates and raised its full-year profit outlook.
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