Stocks fell in early trading Tuesday after wholesale inflation rose more than expected in November, led by a surge in energy costs.
The increase likely will be discussed as
Federal Reserve policymakers begin a two-day meeting on interest rates. The Fed is expected to keep rates unchanged when it releases a policy statement following the meeting Wednesday.
The Labor Department said wholesale prices jumped 1.8 percent last month, more than double the 0.8 percent gain analysts expected. Core inflation, which excludes energy and food, rose 0.5 percent, the biggest increase in more than a year.
A number of investors see a rate hike coming within the next year as the Fed takes a pre-emptive strike to keep inflation at bay. That would help shore up the value of the dollar, but also could trip up a rally that has pushed stocks sharply higher over the past nine months.
Investors also turned cautious after Best Buy said its fourth-quarter profit margins will face pressure as shoppers look for less expensive items. The comments came as the electronics retailer said its third-quarter earnings more than quadrupled.
Stocks fell overseas as the dollar rose against the euro amid continuing worries about Greece's debts and the financial health of Austria's banks.
In midmorning trading, the Dow Jones industrial average fell 38.84, or 0.4 percent, to 10,462.21. The broader Standard & Poor's 500 index fell 4.99, or 0.5 percent, to 1,109.12, and the Nasdaq composite index fell 10.10, or 0.5 percent, to 2,202.00.
Later Tuesday, investors will get a fresh assessment on the housing market. The National Association of Home Builders is expected to release its housing market index for December. The index tracks builders' perceptions of market conditions around the country.
Investors know that any market gains could slip in this last full trading week of the year, as traders may try to lock in profits made since March.
Major stock indexes closed at new highs for the year Monday as Abu Dhabi's $10 billion in aid to help Dubai eased concerns over the emirate's debt problems. A takeover deal by Exxon Mobil Corp. raised optimism about mergers and acquisitions activity.
Late Monday,
Wells Fargo & Co. became the last of the big banks to strike a deal to repay U.S. government assistance. The San Francisco-based bank said it would sell $10.4 billion in new stock to help repay all $25 billion in bailout aid it received from the government at the height of the market meltdown last fall. Earlier in the day,
Citigroup Inc. said it would repay $20 billion worth of taxpayer funds.
Wells Fargo rose 29 cents to $25.78, while
Citigroup fell 6 cents to $3.64.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.59 percent from 3.56 percent late Monday.
The dollar rose against other major currencies, while gold prices fell.
Crude oil rose $1.26, to $70.77 per barrel on the New York Mercantile Exchange.
Two stocks fell for every one that rose on the
New York Stock Exchange, where volume came to 159.4 million shares, compared with 191.6 million shares traded at the same point Monday.
Overseas, Japan's Nikkei stock average fell 0.2 percent. In afternoon trading, Britain's FTSE 100 fell 0.8 percent, Germany's DAX index fell 0.4 percent, and France's CAC-40 lost 0.6 percent.
