Wall Street on Wednesday continued to trade on the latest round of quarterly U.S. corporate profit reports, always important data points in a capitalist economy.
But the growth of a communist economy, China, loomed behind the headlines.
China reported that its economy grew at a 9.9 percent year-over-year rate in the fourth quarter and for the full year in 2005.
For comparison, U.S. economic growth in the fourth quarter, to be reported Friday, is estimated at 2.8 percent.
China contributes more than 25 percent of world economic growth. The Chinese gross domestic product trails only those of the U.S., Japan and Germany.
China’s December economic numbers “indicate no let-up in momentum, suggesting that even with some moderation this year, annual GDP growth of at least 9 percent in 2006 appears well within reach”–without serious inflation, wrote David Cohen of ActionEconomics in an analysis of the latest Chinese data.
Two indicators of the effects of China’s expansion are commodity prices, especially oil and gas, and share prices of U.S. companies selling in China, including General Motors and Caterpillar.
GM was the top-performing stock on a price change basis in the Dow Jones industrial average Wednesday. Caterpillar, which set an all-time intraday high of $63.25, was the third-biggest gainer.
As for copper, the metal set record highs, along with zinc and lead, in London trading. U.S copper futures climbed 5.10 cents, or 2.34 percent, to $2.2035 per pound.
As the largest buyer of U.S. Treasury securities, China is never far removed from U.S. markets.
Treasury securities fell for a second day, sending interest rates higher, after a weak auction of $22 billion in 2-year notes.
In particular, analysts cited thin bidding by so-called indirect bidders, which include foreign central banks such as China’s.
A surprisingly sluggish report on existing-home sales in December failed to generate enthusiasm for Treasuries, which usually thrive on negative economic news.
The auction brought a yield of 4.43 percent, up from 4.40 percent at the December auction of 2-year T-notes.
WEDNESDAY’S ACTION: Stocks marked time in heavy trading volume.
The Dow Jones industrial average slipped 2.48 points, to 10,709.74. Among the 30 Dow stocks, gains by GM, Hewlett-Packard and Caterpillar were offset by losses by 3M, Johnson & Johnson and Exxon Mobil.
The broader Standard & Poor’s 500 index closed down 2.18, at 1264.68. Abbott Laboratories was the biggest gainer in the S&P 500 based on market capitalization and the second-biggest percentage gainer.
Exxon Mobil was the biggest S&P 500 loser by market cap, despite the company’s announcement of an increase in its quarterly dividend, to 32 cents a share from 29 cents, payable March 10 to shareholders of record Feb. 10.
The Nasdaq composite index lost 4.60, to 2260.65. The Russell 2000 index of small-company stocks fell 1.57, to 716.45.
New York Stock Exchange trading volume swelled to 1.92 billion shares. Losers outnumbered winners by a 6-5 ratio among NYSE listed stocks. Nasdaq volume totaled 2.17 billion shares, as losers topped winners by about an 8-7 ratio.
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bbarnhart@tribune.com
