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Stocks End Lower; Dow Off 40.10

February 24, 1998

NEW YORK (AP) _ Stocks retreated today in uneventful trading as investors nibbled away at some of their big gains from the past month.

The Dow Jones industrial average slipped 40.10 points to close at 8,370.10, according to preliminary calculations, extending a modest pullback from last Wednesday’s record close of 8,451.06.

Broad-market indexes, several of which set new highs on Monday, also slumped as interest rates rose in the bond market despite another impressive reading on inflation.

The Labor Department reported that a big drop in energy prices helped keep an overall measure of consumer prices unchanged in January, the first month without inflation in four years.

With a flood of cheap imports from the struggling Asian economy expected to help keep a lid on prices, today’s data reinforced the view that the Federal Reserve won’t increase interest rates to protect against inflation by slowing the U.S. economy.

Investors may have been discouraged, however, that Fed chairman Alan Greenspan, delivering a semiannual report to Congress, gave no hint of a possible cut in the central bank’s lending rates to counter the drag of the economic crisis in Asia. Greenspan hailed the performance of the U.S. economy and indicated that the Fed would leave rates alone and see how developments unfold abroad.

Meanwhile, in a sign that the U.S. economy may have enough vigor to weather the drop in demand from Asia, a business research group said consumer confidence soared to a three-decade high in February.

Prominent among the big decliners in U.S. trading were British drug giants SmithKline Beecham and Glaxo Wellcome, which slid following late Monday’s announcement that talks had broken off in what would have been the biggest corporate merger in history.

Merck and Disney pulled back as the Dow’s two biggest decliners, negating a big gain from J.P. Morgan, which rose sharply amid news that the investment bank is cutting about 5 percent of its work force and has been examining merger possibilities.

Overseas, Tokyo’s Nikkei stock average fell 2.5 percent, Frankfurt’s DAX index fell 1.2 percent and London’s FT-SE 100 fell 0.9 percent.

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