Stocks Open Lower on Inflation Report
Customers make purchases at a Home Depot story in Chicago, Friday, Aug. 8, 2008. The Home Depot Inc., the nation's largest home improvement retailer, reported a 24 percent drop in second-quarter profit, 8 August 2008, but beat Wall Street expectations. The company reiterated its downbeat outlook for the year amid a weak housing and home improvement market that shows no signs of recovery.18 August 2008
By Madlen Read
Stocks fell sharply in early trading Tuesday, with a hefty jump in wholesale inflation raising fresh concerns about the drag of rising prices on the economy.
The Labor Department said its Producer Price Index rose by 1.2 percent in July, more than double the expected rate. The increase means prices have risen in the past 12 months at the fastest pace in 27 years. The figure follows a similar reading last week that showed consumers are also facing rising inflation.
A weak report on new home construction also worried investors. The Commerce Department said July housing starts fell to an annual rate of 965,000 units, the lowest level in more than 17 years. The number was higher than the rate of 950,000 units analysts had predicted, but did little to quell investors' worries about the sector.
The weakness in housing has not only imperiled home builders and suppliers, but has left financial companies reeling over how to cope with soured mortgage debt.
Tuesday's pair of reports indicated to investors not only that the financial sector is struggling to right itself after billions of dollars in credit losses, but also that the rest of the economy is still showing significant signs of stress.
One of the few bright spots, however, is the price of oil. Crude has fallen substantially from its July record above $147 a barrel, and traded slightly lower at around $112 a barrel in early trading Tuesday.
The Dow Jones industrial average fell 82.89, or 0.72 percent, to 11,396 in early trading.
Broader stock indicators also dropped. The Standard & Poor's 500 index fell 7.72, or 0.60 percent, to 1,270.88, and the Nasdaq composite index fell 14.16, or 0.59 percent, to 2,402.82.
By Madlen Read
Stocks fell sharply in early trading Tuesday, with a hefty jump in wholesale inflation raising fresh concerns about the drag of rising prices on the economy.
The Labor Department said its Producer Price Index rose by 1.2 percent in July, more than double the expected rate. The increase means prices have risen in the past 12 months at the fastest pace in 27 years. The figure follows a similar reading last week that showed consumers are also facing rising inflation.
A weak report on new home construction also worried investors. The Commerce Department said July housing starts fell to an annual rate of 965,000 units, the lowest level in more than 17 years. The number was higher than the rate of 950,000 units analysts had predicted, but did little to quell investors' worries about the sector.
The weakness in housing has not only imperiled home builders and suppliers, but has left financial companies reeling over how to cope with soured mortgage debt.
Tuesday's pair of reports indicated to investors not only that the financial sector is struggling to right itself after billions of dollars in credit losses, but also that the rest of the economy is still showing significant signs of stress.
One of the few bright spots, however, is the price of oil. Crude has fallen substantially from its July record above $147 a barrel, and traded slightly lower at around $112 a barrel in early trading Tuesday.
The Dow Jones industrial average fell 82.89, or 0.72 percent, to 11,396 in early trading.
Broader stock indicators also dropped. The Standard & Poor's 500 index fell 7.72, or 0.60 percent, to 1,270.88, and the Nasdaq composite index fell 14.16, or 0.59 percent, to 2,402.82.
Labels: Economy, United States
posted by HRM Deborah of Israel and the Messenger of Peace at 4:54 PM
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