Updated from 3:30 p.m. EST
Stocks closed lower Friday after
Federal Reserve Chairman Alan Greenspan said in a speech that while the U.S. economy shows signs of rebounding, risks remain that the slowdown could continue.
The averages were hugging the flatline for much of the session, but sellers took control as the session headed toward the close. The
Dow Jones Industrial Average lost 80.33 points or 0.8%, to 9987.53, and the
Nasdaq was down 24.78 points, or 1.2%, at 2022.46. The
S&P 500 fell 10.95 points, or 1%, to 1145.60.
The biggest corporate news surrounded troubled automaker
. The company rolled out a
broad restructuring program under which it will close five plants and take a $4.1 billion charge. The company also slashed its dividend for the second time in a year, cutting its quarterly payout to 10 cents from 15 cents in the preceding quarter and 30 cents in the third quarter. In addition, the automaker plans to cut around 35,000 jobs, or 10% of its worldwide workforce.
Shares of Ford finished up 21 cents, or 1.4%, to $15.50.
In economic news, the government said the
producer price index fell 0.7% last month, the third straight monthly decline. Excluding the volatile food and energy components of the index, prices slipped 0.1% in December. According to
, analysts expected a 0.1% drop in the overall index and a 0.1% increase in the core rate.
With the threat of inflation apparently minor, the Federal Reserve may not be in any rush, at least in the near term, to reverse its rate-cutting campaign of 2001. The U.S. central bank eased rates 11 times last year, and the
fed funds target rate now stands at 1.75%.
"There are sound reasons for concluding that the long-run picture remains bright, and even recent signals about the current course of the economy have turned from unremittingly negative through the late fall of last year to a far more mixed set of signals recently," Greenspan
said in his speech at the Bay Area Council Conference in San Francisco. The remarks represented the Fed chairman's first comments on the economy in three months and come about three weeks before the next meeting of Fed policymakers.
Meanwhile, Wall Street was still reeling from revelations that employees at
auditors, Arthur Andersen, destroyed documents related to the energy trader's bankruptcy. The disclosure came one day after the federal government announced a criminal probe into Enron's collapse.
Merrill Lynch said in a research note earlier that
is on pace to beat fourth-quarter estimates based on strong PC sales during the holiday season. The company's stock ended down 33 cents, or 1.1%, to $29.
Semiconductor equipment maker
missed earnings estimates for the fiscal second quarter sending the stock down 23% to $23.60.
Stocks were mostly higher in Europe. London's FTSE 100 was up 0.2% at 5199, while Germany's Xetra Dax slipped 0.4% to 5210. In Asia, the Nikkei lost 0.9% to 10,442, while the Hang Seng fell 0.8% at 11,166.
Treasuries were stronger. Around 4 p.m. EST, 10-year note was up 28/32 at 101 31/32, yielding 4.86%.