Stocks open lower as wholesale inflation and dollar rise, Fed meets to discuss interest rates
- On 9:56 am EST, Tuesday December 15, 2009
NEW YORK (AP) -- Stocks fell in early trading Tuesday after wholesale inflation rose more than expected in November, led by surge in energy costs.
The increase likely will be discussed as Federal Reserve policymakers begin a two-day meeting on interest rates. The Fed is expected to keep rates unchanged when it releases a policy statement following the meeting Wednesday.
The Labor Department said wholesale prices jumped 1.8 percent last month, more than double the 0.8 percent gain analysts expected. Core inflation, which excludes energy and food, rose 0.5 percent, the biggest increase in more than a year.
A number of investors see a rate hike coming within the next year as the Fed takes a pre-emptive strike to keep inflation at bay. That would help shore up the value of the dollar, but also could trip up a rally that has pushed stocks sharply higher over the past nine months.
Investors also turned cautious after electronics retailer Best Buy said its third-quarter earnings more than quadrupled but warned that that its fourth-quarter profit margins will face pressure as shoppers look for less expensive items.
Stocks fell overseas as the dollar rose against the euro amid continuing worries about Greece's debts and the financial health of Austria's banks.
In the first half-hour of trading, the Dow Jones industrial average fell 37.86, or 0.4 percent, to 10,463.19. The broader Standard & Poor's 500 index fell 4.77, or 0.4 percent, to 1,109.34, and the Nasdaq composite index fell 10.01, or 0.5 percent, to 2,202.09.
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