Dow, Nasdaq tumble on inflation jitters

BY

Stocks opened lower Wednesday after consumer prices showed a larger-than-expected increase in January, touching off concerns that inflation might not dissipate as Wall Street has hoped.

Only last week Wall Street cheered and logged sharp advances after Federal Reserve Chairman Ben Bernanke offered his assessment during Capitol Hill testimony that inflation appeared to be moderating as the economy was showing sustainable growth.

The Labor Department report that the consumer price index rose 0.2 percent in January came as a surprise to Wall Street, which had expected an 0.1 percent increase. Declines in energy prices couldn t fully offset a rise in costs of medical care, food and airline tickets. The core figure, which excludes often volatile food and energy prices, rose a greater-than-expected 0.3 percent.

The inflation news followed a profit report from Hewlett-Packard Co. that dented sentiment on Wall Street.

In the first minutes of trading, the Dow Jones industrial average fell 52.15, or 0.41 percent, to 12,734.49.

Broader stock indicators were lower. The Standard & Poor s 500 index was down 5.04, or 0.35 percent, at 1,454.64, and the Nasdaq composite index fell 8.51, or 0.34 percent, to 2,504.34.

In corporate news, Hewlett-Packard fell $1.15, or 2.6 percent, to $41.98 after the printer and computer maker saw inventories increase during its fiscal first quarter. Sales and profits topped Wall Street s forecasts for the quarter.

Pharmacyclics Inc. plunged $2.48, or 49.2 percent, to $2.56 after the pharmaceutical company said the Food and Drug Administration refused to review clinical studies of Xcytrin, an injection for treating lung cancer that has spread to the brain. The agency cited an improperly filed application, the company said.