Industrials Drop 33.17, Bonds Skid --- Strong Inflation Data Cited for Declines; Dollar Ends Mixed
A disturbingly strong inflation report hurt bond prices and sent stocks skidding in the sharpest decline since the powerful rally began more than a month ago.</br></br>The Dow Jones Industrial Average tumbled 33.17 points to 2899.01 in heavy trading. Long-term Treasury bonds lost nearly 1/2 point, or nearly $5 for each $1,000 of face amount, sending the yield on the Treasury's benchmark issue to 8.03%.</br></br>The dollar was mixed, gaining against the mark but losing ground against the yen.</br></br>Analysts said the government's report on the January consumer price index surprised investors. Consumer prices last month rose 0.4%, or 4.8% on an annualized basis. Worse, the so-called core rate of inflation, excluding food and energy prices, last month was up 0.8%, or 9.6% annually. Analysts had expected an increase of 0.3% in the overall consumer price index and only 0.4% in the core rate.</br></br>"The CPI was surprisingly high and that gave the bond market an excuse to take profits," said Kenneth Spence, director of the technical analysis group at Salomon Brothers. "That, in turn, provided investors with an excuse to take profits in the stock market."