NEW YORK – Stocks fell Thursday after Federal Reserve Chairman Alan Greenspan said recent economic data showed the United States is rising from recession — triggering fears of interest rate increases and leading some to pocket part of the market's recent sharp gains.
The Dow Jones industrial average declined 48.92 points, or 0.46 percent, to 10,525.37, according to the latest data, while the Nasdaq composite slipped 8.77 points, or 0.46 percent, to 1,881.63. The broad Standard & Poor's 500 gave up 5.23 points, or 0.45 percent, to 1,157.54.
"Greenspan speaks and the market rolls over," said Dan Rivera, chief investment officer for U.S. equities at American Express Asset Management Group. "The worry is that if Greenspan thinks we're having an economic recovery, how far behind are rate hikes?"
Investors fear the Fed will raise rates to suppress nascent inflation after 11 cuts last year brought rates down to 40-year lows. Higher interest rates usually hurt lect a modest uptick in economic activity, Rivera said. The Nasdaq composite index had climbed for four straight sessions as Wall Street applauded data showing strong factory orders and an upbeat survey of business conditions.
"We've had several days of good returns so there's a pause," said Brian Bruce, director of global investments for PanAgora Asset Management, which oversees $13 billion. "We've been waiting to make some sells and after the market goes up, you take your opportunities."
Resistance, or the area where sellers are expected to emerge, is at 1,925 to 1,975 on the Nasdaq, 1,175 for the S&P, and 10,600 on the Dow, said Rick BenSignor, technical strategist at Morgan Stanley.
Support for the S&P 500 is in the 1,125 to 1,140 area, Dow at 10,300 and the Nasdaq at 1,825 to 1,850, he said. Support is an area where buyers swoop in to buy stocks after a sell-off.
Greenspan, citing indicators in recent days that stoked an early March stock-market rally, said the U.S. economic expansion was under way, painting a rosier picture than he did a week ago and essentially declaring the recession over.
But he sounded a note of caution, telling lawmakers the recovery would "almost certainly" not log the growth rates of rebounds from past recessions -- which he said were typically around 7 percent on average.
Still, Wall Street worried about higher rates.
"He may raise (rates) quicker than previously anticipated and that's why some of the cyclical stocks are down," said Peter Cardillo, chief strategist at Global Partners Securities Inc.
Cyclical stocks are shares that are most sensitive to overall changes in the economy.
Among cyclicals in the Dow, Procter & Gamble (PG) slid $1.11 to $83.94, United Technologies Corp. (UTX) fell 31 cents to $74.69, and conglomerate General Electric Co. (GE) shed 60 cents to $40.95.
Sepracor Inc. (SEPR) was the day's biggest percentage loser, falling $27.63, or 58 percent, to $19.64, after U.S. regulators said they won't approve the biotechnology company's latest allergy drug because of safety concerns.
The company had hoped its new drug, Soltara, would challenge top-selling Claritin in the $5 billion U.S. market for prescription antihistamines.
Boeing Co. (BA) fell $1.38 to $48.48. South Africa said it chose Europe's Airbus to supply domestic carrier South African Airways with long-haul planes, ahead of the U.S. aerospace giant.
Dow stock General Motors (GM) rose $1.49 to $61.41 after Wall Street house Merrill Lynch said it was raising its investment rating for the No. 1 automaker after the company raised its forecast for 2002 earnings per share.
AnnTaylor Stores Corp. rose $2.05 to $43.05 after the women's apparel retailer reported sharply higher quarterly profits as its efforts to overhaul its merchandise boosted sales.
Curative Health Services Inc. (CURE) stunned Wall Street when the manager of wound-care centers at hospitals said Chief Executive Officer Gary Blackford and two other officers are leaving the firm. Shares tumbled 41 percent, or $6.83 to $9.90.
Wal-Mart Stores Inc. (WMT), the world's largest retailer, rose 80 cents to $61.70. It posted a hefty 10.3 percent rise in same-store sales in February, better than its estimate of a 6 percent to 8 percent increase. Some analysts had forecast a same-store sales push of from 7 percent to 9 percent.
Earlier, bullish data on worker productivity and unemployment had lifted the market.
The number of American workers lining up for state unemployment benefits fell last week. The number of initial jobless claims fell by 5,000 to a seasonally adjusted 376,000 for the week ended March 2, according to a government report. Analysts surveyed in a Reuters poll were expecting a drop to 372,000 from the previous week's revised 381,000.
The productivity of U.S. workers jumped beyond expectations in the final three months of 2001, posting the biggest increase since the second quarter of 2000, the government said.
On the calendar for Friday is monthly data on unemployment and average hourly earnings. Investors said they would scrutinize the figures for more evidence the economy is picking up.
Advancing and declining issues traded nearly evenly the New York Stock Exchange. Consolidated volume came to 1.87 billion shares, compared with 1.89 billion reported Wednesday.
The Russell 2000 index rose 0.12 to 494.92.
Overseas, Japan's Nikkei stock average jumped 2.6 percent. In Europe, Germany's DAX index gained 0.1 percent, Britain's FT-SE 100 rose 0.7 percent, and France's CAC-40 climbed 0.6 percent.
Reuters and the Associated Press contributed to this report.
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