Stocks slump on inflation fears

Stocks resumed their slide Wednesday as concerns about rising inflation trumped a slew of upbeat quarterly reports, including better-than-expected results from Caterpillar Inc. and Intel Corp. The Dow Jones industrial average lost more than 115 points, settling just a whisper above the 10,000 mark, a six-month low.

With 1,200 companies releasing earnings this week, investors have plenty of corporate news to sift through, but the economy remains in the spotlight. Stocks sank after the release of the Federal Reserve’s “Beige Book” survey, which reported expansion of business activity from late February to early April, but “uneven progress” in some parts of the country, and higher inflation. Analysts said the day’s trading underscores the level of fear on Wall Street following last week’s massive sell-off.

“The action last week was pretty destructive to the technical health of the market. That’s not to say we’re doomed to a larger correction, but I think the damage done last week is not easily undone,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “There’s been good earnings news … but it seems to me good news is not having as big an effect on stock prices as bad news is having.”

The Dow closed down 115.05, or 1.14 percent, at 10,012.36, having suffered three straight triple-digit drops last week. It was the Dow’s lowest close since Oct. 28; the index of 30 actively traded industrial stocks last closed below 10,000 on Oct. 26. The Dow is now down 7.15 percent for the year.

The Standard & Poor’s 500 index also skidded to a fresh six-month low, dropping 15.28, or 1.33 percent, to 1,137.50, its worst close since Nov. 2. The day’s trading brought the S&P’s 2005 loss for the index to 6.14 percent.

The Nasdaq composite index lost 18.60, or 0.96 percent, to 1,913.76, the only major index to remain in positive territory for the week.

Treasury prices were little changed, with the yield on the 10-year note falling slightly to 4.20 percent, from 4.21 percent late Tuesday. The dollar extended its decline against the euro and the Japanese yen; gold prices rose. Oil futures were volatile, climbing 15 cents to settle at $52.44 on the New York Mercantile Exchange, after the government’s weekly fuel inventory report showed a decline in crude and gasoline stores; analysts had expected a build for both.

The Fed report, which is based on a survey of its 12 regional banks, found rising prices for energy and other commodities are a significant concern across sectors. Retailers and tourism companies in many regions expressed worry that high energy prices were already dampening business prospects or might soon. Known for the color of its cover, the Beige Book will be used when Fed policy-makers next meet to set interest rates on May 3.

Decliners outnumbered advancing issues by 3 to 1 on the New York Stock Exchange. Preliminary consolidated volume came to 2.22 billion shares, compared with 2.15 billion traded Tuesday.

Overseas, Japan’s Nikkei stock average added 0.21 percent. In Europe, France’s CAC-40 slid 0.31 percent, Britain’s FTSE 100 shed 0.69 percent and Germany’s DAX index fell 0.62 percent.