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Spokane, Washington  Est. May 19, 1883

Signs Of Economic Strength Snap Stock Rally

Associated Press

Stocks ended lower on Friday after struggling all session to stay above water, as new economic data called into question another interest-rate reduction by the Federal Reserve Board later this month.

The Dow Jones industrial average waffled back and forth all day before ending down 4.23 at 4,797.57, breaking a three-day streak of record-breaking sessions. On Thursday, the Dow climbed 36.28 points to a record 4,801.80.

Volume was heavy, with 459 million shares changing hands on the New York Stock Exchange, up from 382.87 million on Thursday.

Traders attributed the heavy volume to the triple expiration of options and futures contracts. The so-called “triple witching” expiration, which occurs every quarter, often precipitates large amounts of computer-generated program trading and adds volatility to the market.

Shares of blue chip companies fell with bonds. The 30-year Treasury bond was off 9/32 point late in the session and yielding 6.48 percent.

Bonds fell early in the session after the Federal Reserve said the nation’s industrial production surged 1.1 percent in August, much more than the 0.6 percent increase that economists predicted.

The report also showed that a key indicator of inflationary pressures rose strongly in August. Industries were operating at 84.3 percent of capacity last month, a 0.6 percent jump from July. When factories operate at excessively high percentages of capacity, it can cause shortages in raw materials that drive up inflation.

Investors took the new data to mean that the prices might be growing enough to discourage the Federal Reserve from lowering interest rates at its policy meeting beginning Sept. 26. Just Thursday, the Dow shot to a new high, as a surprisingly weak reading on retail sales and unemployment claims lifted hopes for an easing.

Some of the stocks moving substantially or trading heavily Friday:

NYSE

AT&T Corp. rose 3/4 to 58-1/2.

The telephone giant has started cutting as much as 20 percent of its worldwide computer work force and will take a $1.2 billion charge in the third quarter to do so, The Wall Street Journal reported Friday. AT&T declined to comment.

IBM fell 1-1/4 to 92-1/8.

Micron Technology fell 3-3/8 to 86-1/4.

Motorola fell 1-3/8 to 78-5/8.

Cypress Semiconductor fell 1 to 38-7/8.

Texas Instruments fell 1-3/4 to 75-5/8.

Computer stocks continued their descent after IBM said shipment of its new mainframe computers would be delayed.

Hewlett-Packard fell 4 to 80-1/2.

Josepththal Lyon & Ross downgraded the stock to “hold” from “buy,” saying the potential impact of the strengthening U.S. dollar had not been factored into the stock price.

NASDAQ

Oracle Corp. fell 7-1/4 to 37-5/8.

Informix fell 2-11/16 to 29-5/8.

Sybase fell 1/16 to 33-11/16.

Salomon Brothers cut Oracle from a “buy” recommendation to “hold.” The company said Thursday that its first-quarter net income fell to 12 cents per share from 14 cents a year ago. Those were in line with analysts’ expectations, but analysts noted slower growth in the company’s core database software business. Database companies Informix and Sybase fell in sympathy.