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Doubts about recent rally drag stocks lower

Stocks sank in listless trading Wednesday, as investors found little reason to extend a year-end buying spree.
/ Source: The Associated Press

Stocks sank in listless trading Wednesday, as investors found little reason to extend a year-end buying spree.

The market is more than a month into a fourth-quarter rally that has started to feel halfhearted, with strong early gains in many sessions being whittled away by afternoon selling.

“I don’t see a lot of people, just based on the volume we’ve had, betting on a bull market,” said Ned Riley, chief investment officer of Riley Asset Management in Boston.

The only significant data expected Wednesday was a mid-quarter business update from Texas Instruments Inc. after the close of regular trading. Data on petroleum inventories came in better than expected, but that didn’t improve Wall Street’s mood.

The Dow Jones industrial average finished the day down 45.95 points, or 0.4 percent, while the broader Standard & Poor’s 500-stock index declined 6.33 points, or 0.5 percent. The technology-rich Nasdaq composite index fell 8.75 points, or 0.4 percent.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.52 percent from 4.48 percent late Tuesday. The U.S. dollar was up against other major currencies in European trading. Gold prices set new highs in Europe for the second straight day. Strong weekly inventory data from the Department of Energy sent oil futures lower.

Wall Street is contending with a series of gloomy predictions about the housing market. The latest, a quarterly forecast by the University of California, Los Angeles predicted that a sustained decline will hit the U.S. housing market next year, costing the nation as many as 800,000 jobs. The slowdown is likely to last several years, with as many as 500,000 construction jobs and 300,000 financial sector positions lost, the quarterly Anderson Forecast predicted.

Whether housing prices will have a “soft landing” or whether they’ll crash is a frequent topic of debate among Wall Street strategists. The fear is that a crash will bring down related businesses and depress consumer spending.

In company news, Ford Motor Co. rose 9 cents to $8.20 on reports that its board of directors is meeting Wednesday and Thursday to consider a restructuring plan likely to include significant job cuts and plant closings.

In September, Ford Chairman and CEO Bill Ford named Mark Fields president of the Americas for Ford in the company’s second management shake-up in less than two years. Bill Ford said Fields was helping craft a restructuring plan that would include “significant” job cuts and plant closures.

General Motors Corp, which has had huge losses this year amid increasing health care costs and falling U.S. market share, has named Frederick “Fritz” Henderson, a longtime executive who has been overseeing the restructuring of its European operations as its new chief financial officer. Henderson is currently chairman of GM Europe and was president of GM Asia Pacific from 2002 to 2004. GM fell 65 cents to $23.04.

Diversified manufacturer 3M Co. fell 32 cents to $77.38 after it named George W. Buckley, the chairman and chief executive of boat maker Brunswick Corp., as its chairman, president and chief executive officer, effective immediately. Buckley replaced interim Chairman and Chief Executive Robert S. Morrison. The company focused its search on outsiders after Jim McNerney left July 1 to lead Boeing Co.

Overseas, Japan’s Nikkei stock average rose 0.4 percent. In Europe, Britain’s FTSE 100 was down 0.2 percent, Germany’s DAX index was down 0.6 percent and France’s CAC-40 was down 0.4 percent.