Things got steadily uglier in afternoon trading as major indices tumbled further and further into the red.
Worries about slowing corporate profits and higher energy prices outweighed inflation relief, as investors dumped shares before closing shop for the weekend.
Nasdaq Composite Index was down 79 to 3835, and the
Dow Jones Industrial Average was down 160 to 10,927.
S&P 500 and the
Russell 2000 were also getting some rough treatment, down 15 and 8, respectively.
This morning's benign economic data was quickly absorbed as investors honed in on corporate profits and fretted about the negative effects of a slowdown.
Consumer Price Index came in at a 0.1% drop vs. expectations of a 0.2% rise, while the core -- which is minus food and energy -- was right in line with expectations at a 0.2% jump. The numbers are further evidence of tame inflation, though the good news was dragged down by a drop in energy prices, which have since risen. The CPI measures consumer inflation.
Industrial production and capacity, which came in at 9:15 a.m., was stronger than expected. The market had expected a slight drop in manufacturing, and economists were estimating it would remain unchanged, according to
consensus forecasts. But the number came in up 0.3%, while capacity utilization remained at 82.3% vs. an expected 82%.
The latest numbers seemed to confirm "inflation as being nonexistent," said John Zimmerman, director of growth strategies at
Banc of America Capital Management
in St. Louis. "There are even rumblings of potential
Fed easing starting to get into the market psyche. It is a soft landing," he said.
"We're a little bit on the razor's edge today, with investors unsure because of triple witching. There are a lot of near-term crosscurrents of uncertainty and skepticism," Zimmerman said.
Triple-witching -- the expiration of equity options, index options and futures contracts -- often whips up a little extra volatility for the market. Given that, some market watchers are trying not to read too deeply into today's moves.
"The true path of the market should start Monday, because many of the swings caused by triple witching take place in the two weeks preceding it," said Kenneth Sheinberg, head of listed trading at
. "If they can't get the market going soon, there could be a serious sell-off."
Company news was mostly thin.
said it would buy back up to $5 billion of common and Class B stock in an effort to lift its stock price.
wrote about the buyback in a separate story
yesterday . Ford was fractionally higher on the news.
was seeing heavy trading action on speculation it could be a takeover target. On the New York Stock Exchange, 25.3 million shares had changed hands at midday.
was catching a beating after a disappointing revenue report and an analyst downgrade from
. The stock was lately down 16.1%.
The energy sector was on a tear as oil prices stayed above $34 a barrel due to growing tensions in the Middle East and a storm threatening the Gulf of Mexico.
shot to a new 52-week high of $89.88. Lately the stock was at $89.50.
American Stock Exchange Oil & Gas Index
was up 3.8%, while the
Philadelphia Stock Exchange Oil Service Index
was up 1.8%.
Utility stocks were also among the rare green spots today with the
Dow Jones Utility Average
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The 10-year Treasury note was lately flat at 99 10/32 and yielding 5.842%.
The CPI fell 0.1% in August, its first drop in 14 years, but a 2.9% drop in energy prices was to blame. The core CPI, which excludes food and energy and is a more stable barometer of inflation trends, rose 0.2%, in line with the average forecast. The sharp rise in oil prices over the last month is expected to produce a considerably less friendly September CPI.
The annual growth rate of the CPI edged down to 3.4% in August from 3.5% in July.
The Treasury market is continuing the trend that started earlier this week, favoring short-term securities at the expense of long-term ones, based on the view that the Fed is finished raising interest rates and may contemplate cutting them if global growth hits a series of speed bumps.
Yesterday, an early rally in the bond market -- after a surprisingly friendly reading on inflation at the wholesale level -- morphed into a sell-off that moved the 30-year bond's yield decisively higher than the 10-year note's yield for the first time since January. The sell-off came amid shifting views on monetary policy and heavy issuance of corporate bonds.
wrote a separate article on the steepening
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