Dow Industrials Drop Below 13,000

NEW YORK -- The Dow Jones industrial average has fallen below 13,000. In the opening minutes, it's fallen 37.07 to 12,991.85.

The Nasdaq Composite is off 6.60 to 2,492.07 while the Standard & Poor's 500 index has dropped 3.45 1,423,09.

Declines in the market come a day after Dow Jones industrial average fell more than 200 points, and as stock markets posted losses worldwide.

Investors seemed to have little reaction to the government's report that consumer price inflation rose only modestly in July.

The market also seemed unaffected by an announcement from the Federal Reserve _ made soon after the Labor Department's inflation report _ that it is ready to add more cash to the banking system if needed. Central banks worldwide have supplied billions of funds to the interbank lending market over the past week to head off a liquidity crunch and keep interest rates stable.

The Labor Department said its Consumer Price Index _ a gauge of price inflation on food, energy and consumer products _ rose 0.1 percent in July, meeting the consensus forecast of economists polled by Thomson Financial.

Investors are also watching for further signs of a slowdown in consumer spending. The stock market skidded sharply Tuesday after Wal-Mart Stores Inc., one of the 30 stocks in the Dow Jones industrials, reduced its profit outlook as weak economic conditions led consumers to curtail spending.

Department store chain Macy's Inc. on Wednesday said second-quarter profit fell short of its initial expectations, which were lowered in July. Chairman, President and Chief Executive Terry J. Lundgren said in a statement he is optimistic business will improve in the second half of the year "despite what appears to be a more challenging economic environment," but the company's earnings outlook for the third and fourth quarters fell short of analysts' consensus forecast.

The potential for a slowdown in consumer spending _ which has been a major prop for the economy _ has compounded investors' worries over a shrinking of available credit due to widespread problems in the su+bprime mortgage market.

In other corporate news, agricultural equipment maker Deere & Co. reported profit climbed 23 percent in the fiscal third quarter _ topping analyst estimates _ as sales growth overseas offset falling sales in the U.S. and Canada.

Packaged foods maker Sara Lee Corp. said profit swelled above market expectations as sales climbed in nearly every division. The maker of Jimmy Dean sausage and Sara Lee baked goods posted net income of $117 million versus $8 million a year ago.

Stocks declined worldwide on Wednesday in response to Tuesday's drop on Wall Street. Japan's Nikkei stock average slid 2.19 percent. In afternoon trading, Britain's FTSE 100 lost 1.48 percent, Germany's DAX index slipped 0.77 percent, and France's CAC-40 dropped 1.54 percent.

Light, sweet crude rose 90 cents to $73.29 in premarket electronic trading on the New York Mercantile Exchange, as Tropical Storm Dean strengthened in the Caribbean and headed west _ posing a potential, if still distant, threat to oil installations in the Gulf of Mexico.

Gold prices retreated, while the dollar rose against the euro, British pound and Japanese yen.

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