Online Stock Trading | More Interest Rate concerns, I ask why???

More Interest Rate concerns, I ask why???


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Stocks Fall for 2nd Day on Rate Concerns
Wednesday June 6, 10:27 am ET
By Tim Paradis, AP Business Writer

Stocks Open Lower After European Rate Hike, Productivity Data
NEW YORK (AP) — Stocks fell for a second straight session Wednesday as U.S. investors’ uneasiness about interest rates grew after a rate hike in Europe.Data showing that productivity waned in the first quarter did little to alleviate investors’ worries that the inflation-wary Federal Reserve might lean toward raising rather than lowering rates later this year.

The European Central Bank lifted its key interest rate by a quarter of a percentage point to 4 percent, as expected, and the bank’s president Jean-Claude Trichet said European economic growth is significantly stronger than expected, and that inflation risks are on the rise. The comments pushed stocks in Europe lower.

In midmorning trading, the Dow Jones industrial average fell 84.03, or 0.62 percent, to 13,511.43.

Broader stock indicators also fell. The Standard & Poor’s 500 index fell 10.29, or 0.67 percent, to 1,520.66, and the Nasdaq composite index fell 21.58, or 0.83 percent, to 2,589.65.

The decline Wednesday came a day after the three major indexes slumped after remarks from Fed Chairman Ben Bernanke and service sector data hinted that the economy is on the rebound, lowering the chance of an interest rate cut.

Wall Street will be keeping a close eye on the Treasury market Wednesday as the 10-year note’s yield approaches 5 percent, a level not seen since August 2006. Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.98 percent from late Tuesday.

The remarks from the ECB made another rate increase for the euro look probable, which would likely dampen an already weakened U.S. dollar. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 20 cents to $65.81 per barrel on the New York Mercantile Exchange, ahead of the U.S. government’s weekly oil inventory report.

The Labor Department’s reading on first-quarter productivity came in at 1.0 percent, as expected, and was down from the previous estimate of 1.7 percent. However, unit labor costs rose a higher-than-expected 1.8 percent, stirring concerns of inflationary pressures.

Along with the productivity data, the stock and bond markets received comments from Fed officials. Richmond Fed President Jeffrey Lacker, speaking in Frederick, Md., remained concerned about inflation but said the economy appeared poised for increased growth. Kansas City Fed President Thomas Hoenig is expected to speak Wednesday afternoon in Cody, Wyo., about the U.S. economy and monetary policy.

In the most recent takeover news, shareholders of the owner of the Outback Steakhouse restaurant brand late Tuesday voted to approve a sweetened $3.2 billion offer from a private investor group. Outback rose 1 cent to $41.01.

Meanwhile, two hedge funds that own stakes in TD Ameritrade Holding Corp. are pushing the online brokerage firm to join forces with either E-Trade Financial Corp. or Charles Schwab Corp. TD Ameritrade jumped 70 cents, or 3.5 percent, to $20.65.

In other corporate news, Panera Bread Co. fell $7.47, or 12.8 percent, to $50.84 after the restaurant chain reduced its forecasts for second-quarter profits and same-store sales, or sales at stores open at least a year.

XTL Biopharmaceuticals Ltd. fell 63 cents, or 18 percent, to $2.90 after the company halted development of a hepatitis C drug candidate after determining it was no more effective than a placebo in reducing patients’ viral load in an early stage clinical trial.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 265.4 million shares.

The Russell 2000 index of smaller companies fell 7.63, or 0.90 percent, to 840.62.

In other overseas trading, China’s benchmark Shanghai Composite Index rose 0.2 percent, while Japan’s Nikkei 225 index fell 0.07 percent. Britain’s FTSE 100 fell 1.11 percent, Germany’s DAX index fell 1.65 percent, and France’s CAC-40 fell 0.88 percent.

http://biz.yahoo.com/ap/070606/wall_street.html?.v=24

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