BULLS GET SKITTISH BUT BUY THE BLUE.Byline: Eileen Glanton Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Blue-chip stocks closed higher Tuesday as investors put their money into companies whose fortunes rise along with a growing economy. But worries that the economy is expanding too rapidly held the overall market lower for much of the day. The Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. rose 36.52 to close at 10,596.26 after being off as much as 150 points earlier in the session. Broader stock indicators closed lower. The Standard & Poor's 500 fell 7.58 to 1,294.26, and the Nasdaq composite index Nasdaq Composite Index An index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the Nasdaq System (approximately 5,000 stocks) and is weighted according to the market value of each listed fell 58.49 to 2,412.03. Concerns about inflation, which have increased the market's volatility over the past two weeks, were behind Tuesday's declines as well. Stock prices dropped after the National Association of Purchasing Management said the nation's industrial economy expanded for a fourth straight month in May. The report, which gauges the health of the nation's factories, was much stronger than expected. The association's report is widely followed because it usually provides the first indication of how the economy performed in the just-ended month. The May report was highly anticipated while traders hoped for a sign that the economy is not overheating Overheating An economy that is growing very quickly, with the risk of high inflation. . Instead, the report, which revealed strong price rises in raw materials for the first time in 16 months, sent stocks skidding. ``With all the skittishness skit·tish adj. 1. Moving quickly and lightly; lively. 2. Restlessly active or nervous; restive. 3. Undependably variable; mercurial or fickle. 4. Shy; bashful. about inflation, the real surprise from this report is that we didn't drop even further, even faster,'' said William Meehan, chief market analyst for Cantor Fitzgerald. Stock traders are increasingly worried that rising inflation will prompt the Federal Reserve to raise interest rates, leading to higher corporate borrowing costs and lower profits. But by midafternoon, investors began picking up cyclical stocks that thrive on a growing economy. Aluminum company Alcoa gained $5.0625 to $60.0625, the strongest of the Dow components. Georgia Pacific, up $8.4375 to $94.875, led a number of pulp and paper companies higher. Wall Street is now looking ahead to a speech today by Federal Reserve Chairman Alan Greenspan Alan Greenspan Dr. Greenspan is Chairman of the Board of Governors of the Federal Reserve System. Dr. Greenspan also serves as Chairman of the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. and to a Labor Department The Department of Labor (DOL) administers federal labor laws for the Executive Branch of the federal government. Its mission is "to foster, promote, and develop the welfare of the wage earners of the United States, to improve their working report Friday on unemployment. |
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