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Stocks decline in afternoon sell-off

| Wednesday, Nov. 16, 2005

NEW YORK -- Nervous investors collected profits and sent stocks lower Tuesday, wiping out an early advance amid conflicting signals about inflation and consumer spending.

The market pulled back when the Dow Jones industrials reached an eight-month high shortly after midday. Investors have been uneasy for months about inflation and soaring oil prices, and their anxiety was fed by a Labor Department report that energy costs led a jump in wholesale prices last month. Many decided the safest strategy was to sell.

Wall Street's retreat also came despite crude oil settling below $57 a barrel for the first time since June 30. A barrel of light crude dropped 71 cents to $56.98 on the New York Mercantile Exchange.

At the close of trading, the Dow lost 10.73, or 0.1 percent, to 10,686.44. During the session, the Dow rose nearly 45 points to reach its highest level since March 15.

Broader stock indicators also gave up their gains. The Standard & Poor's 500 index finished down 4.75, or 0.39 percent, at 1,229.01, and the Nasdaq composite index declined 14.21, or 0.65 percent, to 2,186.74.

Bonds rose, with the yield on the 10-year Treasury note tumbling to 4.56 percent from 4.61 percent late Monday. The dollar was mostly lower against other major currencies, and gold prices were little changed.

It was the specter of higher prices that unnerved Wall Street.

Department store J.C. Penney Co. said its earnings surged 57 percent last quarter, but blamed high energy costs for its cautious holiday sales outlook. Penney slid $1.54 to $52.21.

Staples Inc. lost $1.06 to $22.80 after the office products supplier said its quarterly profit rose 14 percent, which trailed its earnings growth in recent years.

Elsewhere, acquisition activity boosted some health care stocks. Johnson & Johnson revised its bid for Guidant Corp. to $21.5 billion, about $4 billion less than the original deal. Last week, Guidant sued Johnson & Johnson for trying to back out as Guidant came under scrutiny for recalls of its implantable heart devices. Johnson & Johnson rose $2.32 to $62.83, and Guidant added $4.75 to $62.50.

Declining issues outpaced advancers by 11 to 5 on the New York Stock Exchange, where preliminary consolidated volume of 2.35 billion shares topped the 1.93 billion traded Monday.

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