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GE, IBM fall as shares decline
US EQUITIES:
With hopes of further interest rate cuts beginning to fade, investors began to back off on Friday. The result was the lowest volumes this year
BLOOMBERG, NEW YORK
Sunday, May 13, 2001, Page 10
US stocks fell after reports of unexpected strength in retail sales and consumer confidence convinced some investors the Federal Reserve won't reduce interest rates as much as expected.
General Electric Co and Intel Corp led the decline, while the New York Stock Exchange had its slowest day this year. Major indexes completed a losing week, the first time all three have dropped during the same week since April 6.
"The idea of aggressive Fed [rate cuts] pushing the market higher has gone away,'' said Crit Thomas, manager of the US$225 million Armada Large Cap Ultra Fund in Cleveland.
The Dow Jones Industrial Average fell 89.13, or 0.8 percent, to 10,821.31, led by International Business Machines Corp, after a Bear, Stearns & Co analyst said the company's 30 percent rise in the past six weeks makes further gains unlikely.
The Standard & Poor's 500 Index declined 9.51, or 0.8 percent, to 1,245.67. The NASDAQ Composite Index dropped 21.43, or 1 percent, to 2,107.43.
For the week, the NASDAQ declined 3.8 percent, the S&P 500 1.7 percent and the Dow 1.2 percent.
The reports that retail sales rose 0.8 percent in April and consumer confidence rose to its highest level in four months suggest that people aren't feeling the pinch of a slowing economy and rising unemployment. That may persuade the Fed to hold off on additional rate cuts after next week.
Four stocks fell for every three that rose on the NYSE and the NASDAQ Stock Market. Some 894 million shares traded on the Big Board, according to preliminary statistics. That's the fewest since Dec. 26 and 23 percent below the three-month daily average.
Software stocks fell, making them the biggest drag on the S&P 500. Microsoft Corp declined US$0.60 to US$69.40, Oracle Corp dropped US$0.51 to US$15.88, BMC Software Inc slid US$1.29 to US$22.17 and Veritas Software Corp fell US$2.20 to US$62.90.
Intel, the biggest semiconductor maker, lost US$1.07 to US$27.94.
General Electric, the largest company by market value, fell US$0.82 to US$49.01.
Pegasus Communications Corp fell US$4.18, or 16 percent, to US$21.90. The satellite-television provider had a first-quarter loss that was wider than analysts forecast as it spent more money to sign up customers to DirectTV.
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