New York – Stocks closed modestly lower Wednesday as the latest batch of upbeat economic data made investors uneasy about more interest-rate hikes by the Federal Reserve.
Disappointment over blue chip Procter & Gamble Co.’s lower-than-forecast revenue saddled the Dow Jones average and countered solid earnings from Denver-based Qwest and an improved outlook at Qualcomm Inc., as well as a retreat in oil prices.
An unexpected jump in service-sector growth extended the recent string of data showing the economy expanding at a brisk pace, with a sharp upswing in factory orders also brightening that picture.
However, the gains again had the market concerned about rising interest rates as the Fed continues its fight against inflation.
Russ Koesterich, senior portfolio manager at Barclays Global Investments, said the persistently high level of oil prices is putting pressure on consumer spending, and he added that rising Treasury yields also have created some head wind for stocks.
“The inflationary pressures are building, albeit slowly,” he said. “What we haven’t seen so far is commodities strength, particularly in energy, filter into core inflation. But the fear is that it’s going to happen soon.”
At the close, the Dow was off 16.17, or 0.14 percent, at 11,400.28, after losing as much as 54 points intraday. Tuesday, the Dow closed at 11,416.45, its best since Jan. 19, 2000.
Broader indicators also drooped. The Standard & Poor’s 500 index slid 5.36, or 0.41 percent, to 1,307.85, and the Nasdaq composite index dropped 5.87, or 0.25 percent, to 2,303.97.
Oil and gasoline futures tumbled following a government report that gasoline demand has been flat over the past month, and that fuel supplies are growing as refineries step up output. But crude oil still lingered near record highs as the market fretted about political tension in Nigeria and Iran.
A barrel of light crude slumped $2.33 to settle at $72.28 on the New York Mercantile Exchange, where gasoline dropped 8.9 cents to $2.086 per gallon.
