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Wednesday, March 18, 2009

Stocks Decline At Opening Bell

Dow Industrials Slide 70 Points

U.S. stocks pulled back after the previous day's rally, as investors awaited
the outcome of a two-day Federal Reserve meeting.

The Dow Jones Industrial Average was down 51 points. The S&P 500 declined
0.5% and the Nasdaq Composite Index fell 0.03%.

A surprising jump in housing starts last month helped drive stocks to the
fifth winning session in six Tuesday. The Dow industrials rallied by 178.73
points, leaving the blue-chip gauge 13% above the bear-market lows it hit on
March 9. Major indexes are at their highest levels in a month.

The Federal Reserve will conclude a two-day meeting Wednesday. The central
bank is expected to leave interest rates unchanged, but investors will be
parsing the Fed's post-meeting statement for any signals that its outlook has
changed or that it will take more measures to lubricate money markets. The Fed
had said in its last statement that it was prepared to purchase long-term
Treasurys if needed to improve credit conditions.

Most commentators expect that the Fed won't announce such steps Wednesday as
long-term interest rates remain low, which has driven down mortgage rates. Data
Wednesday from the Mortgage Bankers Association showed mortgage applications
rose 21% last week as the average 30-year fixed rate fell to 4.89%. But
economists expect the Fed will keep the possibility of such purchases open.

The Fed's statement is expected to be released around 2:15 p.m. EDT.

Treasurys were gaining in recent trading as stocks weakened; the yield on the
30-year bond was around 3.75%. In other economic news, consumer-price data were
released for February, showing a 0.4% increase and raising the odds that the
U.S. will avoid a protracted deflationary spiral.

Shares of Sun Microsystems jumped 65% after the Wall Street Journal reported
that International Business Machines is in talks to acquire the company. IBM is
likely to pay at least $6.5 billion in cash, or double Sun's closing price
Tuesday. IBM shares were down about 1.8%.

Most European stock markets fell. The pound dropped against the dollar after
a dismal report on U.K. employment. Asian indexes gained; the Nikkei 225 rose
0.7%. The Bank of Japan said that it will increase its purchases of government
debt and that it was considering providing loans to banks.

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