US stocks inch lower

Wall Street ended an erratic session with a minuscule loss today as investors were torn between concerns over rising interest rates and optimism about generally strong corporate earnings.

Tepid outlooks from companies including Intel also put pressure on the market.

A higher than expected rise in consumer prices stoked anxiety over interest rates, sending stocks down substantially before they stabilised near unchanged levels. Analysts said the muted sell-off showed investors understood that the US economy remained in good health.

The Dow Jones industrial average slipped 3.33, or 0.03%, to 10,377.95, following a 1.3% drop in the previous session.

The broader gauges were also lower. The Nasdaq composite index sagged 5.23, or 0.3%, to 2,024.85, after a 1.7% decline on Tuesday. The Standard & Poor’s 500 index was down 1.27, or 0.1%, at 1,128.17, after a 1.4% loss.

Renewing concerns about inflation, the Labour Department reported that consumer prices rose by 0.5% in March, higher than the 0.3% advance forecast by economists.

The increase in the Consumer Price Index, the government’s most closely watched inflation barometer, was propelled by more expensive petrol, airfares and clothing.

The Federal Reserve has been slow to raise the key short-term interest rate off its current 45-year low in part because of the long period of low inflation. But Fed Chairman Alan Greenspan and other policy makers have indicated a change is coming, though they haven’t said when.

Interest-rate sensitive stocks, such as financials, suffered as rate-wary investors moved assets into more cyclical areas, like the pharmaceutical and health care sector. Bank of America fell 41 cents to 80.09, despite reporting earnings that beat analyst expectations.

Other financial stocks also declined on rate fears. American Express was down 1.60 at 49.80 and JP Morgan Chase & Co lost 77 cents to 39.27. Several drug companies rose. Johnson & Johnson added 1.21 to 52.60 and Pfizer was up 42 cents at 35.81.

Intel was down 30 cents at 27.37 after missing earnings expectations despite an 89% profit spike on demand for computers and other high-tech gear. The world’s largest chip maker also disappointed some analysts with its revenue forecast.

McDonald’s sank 1.27, or 4.5%, to 27.00 after the fast food bellwether reported strong March sales and said its earnings would likely beat Wall Street estimates, but warned of lighter growth in the European market.

Among gainers on the Dow, DuPont added 1.31 to close at 45.00 after the chemical company announced its first-quarter earnings would be significantly higher than earlier forecast, partly because of improvements in its agriculture and nutrition businesses.

Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange.

Volume was light.

The Russell 2000 index, which tracks smaller company stocks, was down 3.82, or 0.6%, at 582.01.