Investors' disappointment shows on Wall Street
Investors punished stocks once again Wednesday, directing most of their anger at blue chips as they grappled with disappointment regarding the Federal Reserve's interest rate policy.
The Dow Jones industrials tumbled 233 points, the sixth time in the past nine sessions that the index had dropped by triple digits. Traders, above, watch the downfall.
The Dow fell 233.76, or 2.4 percent, to finish at 9,487.00, its lowest close in two years. Compounding Tuesday's 238-point dive, Wednesday's decline meant that the Dow has lost 1,371.25, or 12.6 percent, during the past nine sessions.
The selloffs also nearly push the Dow, down 19 percent from its high, into bear market territory. Both the S&P 500 and the Nasdaq already have surpassed the benchmark drop of 20 percent.
economy
Prescription drug costs trigger hike in inflation
Consumer prices rose half as fast in February as they did the month before as energy costs retreated, but big price increases for prescription drugs, food and clothing worried some economists about the prospects for worsening inflation.
The Labor Department reported Wednesday that its Consumer Price Index, the government's most closely watched inflation gauge, rose 0.3 percent in February. That followed a 0.6 percent increase in January, which largely reflected soaring energy costs. Prices in the Midwest edged up 0.1 percent in February.
Of concern to economists is the rising cost for medical care, including prescription drugs, which went up sharply for the second month in a row, increasing by 0.5 percent in February. So far this year, the price for medical care has risen by a seasonally adjusted annual rate of 7 percent.
Layoffs
3Com plans cost reductions after third-quarter loss
3Com Corp. will lay off more workers as it restructures to deal with an economic slowdown that left it with an even bigger loss than analysts expected in the third quarter.
The Santa Clara, Calif.-based maker of communications equipment said revenue for the quarter ended March 2 was $629.6 million, compared with $1.14 billion a year earlier. The fall in revenue left 3Com with a net loss of $246 million, or 72 cents per share, compared with net income of $506.3 million, or $1.40 a share, a year earlier.
Shares of 3Com closed down 6 cents at $6.15 after hitting a new 52-week low of $5.91 earlier in the day.
Earnings
Slow economy hurts FedEx
FedEx Corp.'s profit dropped 4 percent in its third fiscal quarter to fall short of Wall Street expectations, making it the latest victim of a slowing economy.
The parent of the world's largest cargo airline earned $109 million, or 37 cents a share, for the three months ended Feb. 28, down from $113 million, or 39 cents a share, a year ago.
The results included a 4 cent per share benefit from a tax rate change, but otherwise would have been 33 cents a share. That was below the 36 cents a share expected by analysts surveyed by First Call/Thomson Financial.
Despite the news, FedEx shares were up $2.35 a share, or almost 6 percent, to close at $42.6 Wednesday on the New York Stock Exchange.
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