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US Shares Edge Down Over Fed Rate Hike

Posted on: Wednesday, 2 November 2005, 09:00 CST

US shares edge down over Fed rate hike

NEW YORK, Nov. 1 (Xinhua) -- US shares edged down Tuesday while the Federal Reserve hiked US interest rates to their highest level in more than four years.

The US Federal Open Market Committee decided Tuesday to boost the federal funds rate by another one quarter percentage point to expected 4 percent, the highest level since 2001.

This was the 12th consecutive action that the central bank had taken to tighten credit since last June.

The Fed said that "the cumulative rise in energy and other costs have the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer- term inflation expectations remain contained."

Crude edged up but still remained below 60 dollars a barrel amid concerns that warmer-than-normal weather in the United States and Europe may cut heating oil consumption. New York's main contract, light sweet crude for delivery in December, added nine cents to close at 59.85 dollars a barrel.

In company news, Dell, the world's biggest personal-computer maker, reported third-quarter sales of 13.9 billion dollars, which trailed the company's prediction of 14.1 billion dollars to 14.5 billion dollars. Sales also missed Dell's forecast in the second quarter. Dell slumped 2.64 dollars to 29.24 dollars.

Viacom Inc., the media conglomerate that owns MTV, CBS and the Paramount movie studio, reported third-quarter earnings of 45 cents a share, compared with a loss of 28 cents a year earlier. Excluding some costs, profit was 47 cents a share, topping the 45- cent average estimate in a Thomson Financial survey of analysts. Its stock rose 56 cents to 31.61 dollars.

The blue-chip Dow Jones Industrial Average fell 33.30, or 0.32 percent, to 10,406.77.

Broader stock indicators also dropped. The Standard & Poor's 500 index fell 4.25, or 0.35 percent, to 1,202.76, while the Nasdaq composite index was dragged down by Dell, slipping 6.25, or 0.29 percent, to 2,114.05.

Decliners outnumbered advancers by more than 8 to 7 on the New York Stock Exchange, where volume was 1.79 billion, down from 1.90 billion at the same time Monday.

Source: Xinhua News Agency - CEIS

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