Markets Fall on Poor Economic Data
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Friday, May 15, 2009; 4:38 PM
Stocks were down moderately today as investors took a break from a two-month rally and presumed a cautious stance after data showed the economy remains weak.
The blue-chip Dow Jones industrial average closed down 0.8 percent, or 63 points, while the broader Standard & Poor's 500-stock index fell 1.1 percent, or 10 points. The tech-heavy Nasdaq was down 0.5 percent, or 9 points.
Optimism that the economy was not deteriorating as quickly faltered in recent days. Stocks took a dive earlier in the week on worse-than-expected monthly retail sales for April, for example. All of the major indexes closed in negative territory this week. The Dow and S&P fell 3.5 percent and 5 percent, respectively, while the Nasdaq was down 3 percent. Stocks are still far from their March lows.
The economic data today were mixed. The consumer price index was flat in April compared with the previous month, according to Labor Department. But compared with the same period last year, consumer prices were down 0.7 percent.
Falling food and energy prices kept consumer prices steady in April, Nigel Gault, chief U.S. economist for IHS Global Insight, said in a research note. But it was one of the fastest year-over-year declines since June 1955, he said.
Meanwhile, industrial production fell 0.5 percent in April. That was in line with or slightly better than what was expected by analysts. "The rate of decline is slowing, but we see no prospect of near-term recovery," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
The auto sector was also in the spotlight today as General Motors and Chrysler took steps this week to slash the size of their retail networks. Chrysler, which is privately held, notified almost 800 dealers they were being dropped. GM notified 1,100 of its 6,000 dealers today that their franchise agreements would not be renewed. It had the some of the biggest losses on the Dow, losing 5.2 percent.
Overseas stocks were mixed. London's FTSE closed down slightly, about 0.3 percent, while the Dax in Germany was down less than a point. Japan's Nikkei was up 1.9 percent.
Meanwhile, crude oil prices, which have surged in recent weeks, were down nearly 4 percent on the New York Mercantile Exchange to $56 a barrel.
