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Stocks Close Slightly Lower            10/17 16:06

   After an early slide, U.S. stocks clawed back much of the ground they lost 
and ended slightly lower Wednesday. 

   NEW YORK (AP) -- After an early slide, U.S. stocks clawed back much of the 
ground they lost and ended slightly lower Wednesday. Banks climbed but 
retailers, homebuilders and smaller companies fell.

   Stocks slumped in morning trading as homebuilders and retailers took sharp 
losses after the Commerce Department said construction of new homes dropped in 
September. Technology companies fell as IBM suffered its biggest loss in five 
and a half years after it reported weak sales. Stocks were coming off their 
biggest gain in more than six months.

   Bond prices fell, sending yields higher, after the Federal Reserve said some 
of its policymakers argued in their latest meeting that the central bank should 
raise rates to a level that slows economic growth slightly. After years of 
record low rates following the financial crisis, the fact that some 
policymakers are talking about eventually using them to slow the economy is a 
big change.

   Jeremy Zirin, head of investment strategy for UBS' global wealth management 
business, said the Fed won't raise rates to those levels unless there is clear 
evidence inflation has increased. But he said it makes sense for investors to 
be wary.

   "Overly restrictive monetary policy is a risk to the bull market," he said. 
"It would be a mistake for (the Fed) to raise rates in the absence of inflation 
beyond their target, and it's exceedingly unlikely to do so."

   The S&P 500 index fell 0.71 points to 2,809.21. The Dow Jones Industrial 
Average slumped 91.74 points, or 0.4 percent, to 25,706.68. It lost as much as 
319 points Wednesday morning before briefly turning higher.

   The Nasdaq composite slid 2.79 points to 7,642.70. The Russell 2000 index of 
smaller-company stocks skidded 7.23 points, or 0.5 percent, to 1,589.60.

   Stock trading has been erratic recently. Earlier this month the benchmark 
S&P 500 index went through a six-day losing streak that included huge drops 
last Wednesday and Thursday. Then on Friday the S&P 500 jumped 1.4 percent, its 
biggest rally in three months, fell on Monday, and surged 2.1 percent Tuesday. 
Trading had been steady from late June to early October.

   The Federal Reserve released minutes from its meeting in late September, 
when it raised interest rates for the third time this year. A few participants 
believed that the Fed's key interest rate would eventually need to "become 
modestly restrictive" to make sure inflation doesn't climb too high. Other 
officials felt the Fed shouldn't take that step unless there are signs the 
economy is overheating and inflation is rising quickly.

   Bond prices sank. The yield on the 10-year Treasury note rose to 3.19 
percent from 3.15 percent.

   U.S. home construction fell 5.3 percent in September, according to the 
Commerce Department. The pace of homebuilding has slowed since May, and the 
report is the latest sign that the combination of rising home values and 
increasing mortgage rates may be weighing on the market.

   Lennar gave up 2.3 percent to $43.08 and PulteGroup shed 3.4 percent to 
$22.82. Among retailers, Home Depot fell 4.3 percent to $185.17 while Target 
lost 1.6 percent to $84.42 and Macy's dipped 5 percent to $31.84.

   Some investors worried that a weaker housing market is a bad sign for the 
economy. Zirin, of UBS, said the housing market should keep getting stronger as 
long as employment is high and wages are rising, but investors aren't sure what 
is ahead for the economy or stocks.

   "When you get into the latter stages of a bull market or the economic 
expansion, investors get more nervous about the latter stages turning into the 
end of the cycle," he said. "They start looking for any signals that would lead 
them to believe that a downturn is imminent."

   Insurer Prudential rose 1.9 percent to $99.70 after regulators lifted the 
strict government oversight that was imposed on the company after the 2008-09 
financial crisis. Prudential was deemed "systemically important," which meant 
it was subject to special restrictions because of its importance to the 
financial system. It was the last company still carrying that label.

   IBM sank 7.6 percent to $134.05 after its sales in the third quarter fell 
short of analysts' estimates.

   The price of U.S. crude oil dropped 3 percent to $69.75 a barrel in New 
York, its first close below $70 a barrel in a month, after the U.S. government 
said energy stockpiles jumped last week. Brent crude, the international 
standard, fell 1.7 percent to $80.05 a barrel in London.

   Wholesale gasoline lost 3 percent to $1.92 a gallon and heating oil fell 1.2 
percent to $2.31 a gallon. Natural gas jumped 2.5 percent to $3.32 per 1,000 
cubic feet.

   Netflix added 5.3 percent to $364.70 after the streaming video company said 
it picked up 7 million subscribers in the third quarter, a total that was above 
Netflix's own projections as well as analyst forecasts.

   The stock set a record high in early July, but a week later, Netflix 
announced disappointing subscriber totals and gave a weak forecast and its 
stock tumbled. It is still about 13 percent from its highest price.

   The dollar rose to 112.49 yen from 112.18 yen. The euro fell to $1.1507 from 
$1.1578.

   Gold slipped 0.3 percent to $1,227.40 an ounce. Silver lost 0.3 percent to 
$14.66 an ounce. Copper fell 0.1 percent to $2.78 a pound.

   Germany's DAX and the French CAC 40 both fell 0.5 percent. In Britain, the 
FTSE slipped 0.1 percent.

   Japan's benchmark Nikkei 225 jumped 1.3 percent and the Kospi in South Korea 
advanced 1 percent. Markets in Hong Kong were closed for a holiday.


(BE)

 
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