Stocks Flat After Intel, Economic Data

Posted 17 January 2007 @ 06:17 pm EET     Print     Reprint     E-Mail     Comments

NEW YORK (Reuters) - U.S. stocks were little changed on Wednesday as stronger-than-expected producer price inflation in December and disappointing results from technology bellwether Intel Corp. offset a report showing strength in the industrial sector.

The inflation data made a near-term interest rate cut by the Federal Reserve appear less likely, analysts said. Shares of Intel were the biggest drag on three major indexes after the world's biggest microchip maker said quarterly profit fell 40 percent and gross margins would not improve this year. For details, see

The Dow Jones industrial average was down 5.53 points, or 0.04 percent, at 12,577.06. The Standard & Poor's 500 Index was up 0.68 points, or 0.05 percent, at 1,432.58. The Nasdaq Composite Index was down 4.86 points, or 0.19 percent, at 2,492.92. "PPI is a little higher. I guess inflation is back in the equation for today, so it puts question marks around when the

Fed can ease," said Owen Fitzpatrick, head of U.S. Equity Group at Deutsche Bank Private Wealth Management in New York. Before the market opened, futures fell after the Labor Department said the Producer Price Index rose above analysts' expectations, weakening the case for the Fed to cut interest rates in the near future.

In another economic report, the Fed said U.S. industrial output rose more than expected last month, fueled by robust increases in manufacturing and mining. Also underpinning indexes were shares of consumer products maker Procter & Gamble Co. Goldman Sachs raised its rating on the stock. Procter gained 0.8 percent to $65.23.

Intel shares dropped 4.9 percent to $21.23 and had their biggest one-day fall in percentage terms since mid-July. Investors were also looking toward the Fed's Beige Book of economic conditions, due at 2 p.m. (1900 GMT), to gain a clearer picture of the outlook for interest rates.