Stocks fell Tuesday as the Federal Reserve continued its campaign to gradually raise rates high enough to ensure that a rebounding economy doesn’t trigger inflation.
The Dow Jones Industrial Average fell 94.88, or 0.9 percent, to finish the day at 10,470.51. The Standard & Poor’s 500 Index was down 12.07, or 1 percent, to close at 1,171.71. The Nasdaq Composite Index lost 18.17, or 0.9 percent, to settle at 1,989.34.
The Fed’s quarter-point increase of the nation’s short-term benchmark interest rate to 2.75 percent marked the seventh time the central bank has pushed rates higher since it started its credit-tightening campaign last June. In its policy statement, the Fed noted that “pressures on inflation have picked up in recent months.”
Among local companies, KB Home gained 1.6 percent to close at $118.60 as the L.A.-based homebuilder released quarterly earnings after the closing bell on Monday. KB Home reported net income of $122.7 million ($2.82 per diluted share) for the first quarter ended Feb. 28, up from $74.2 million ($1.75) for the like period a year earlier. The company said revenue rose 21 percent to $1.64 billion.
On the down side, shares of videogame publishers THQ Inc. and Activision Inc. sank after rival Electronic Arts Inc. said it expects to earn $1.70 to $1.72 a share this year, down from its estimate of as much as $1.95. THQ lost 3 percent to $28.75 while Santa Monica-based Activision fell 2.2 percent to $22.49.
Worldwide Restaurant Concepts Inc. dipped 1 percent to close at $4.98 as the Sherman Oaks-based restaurant operator and franchiser announced after market close Monday that it would delay the filing of its third quarter Form 10-Q due to its ongoing review of lease accounting procedures. Preliminary financial results for the third quarter of fiscal 2005 will be released on March 24.
National Technical Systems Inc. fell 4.7 percent to close at $4.27 after the Calabasas-based provider of quality and conformance testing said it acquired Phase Seven Laboratories. The company bought Phase Seven, a Santa Rosa-based facility that provides performance testing for new and emerging technologies, to expand on its ability to test central office equipment and fiber optical components. Financial details of the transaction were not released.
