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Stocks edge lower on manufacturing, jobs slowdown
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NEW YORK (AP) — Worries about a slowing economy tugged the stock market lower Wednesday.

The Dow Jones industrial average fell 62 points, or 0.4 percent, to 14,777 as of 12:32 p.m. Eastern time. The Standard & Poor's 500 index, a broader market measure, dropped six points to 1,591, a decline of 0.4 percent.

Stocks were hurt by a report that showed U.S. factory activity fell to its slowest pace of 2013 last month as manufacturers pulled back on hiring and cut stockpiles. Another report said companies added just 119,000 jobs in April, the fewest in seven months.

"Investors are going to be rattled by these numbers," said Colleen Supran, a principal at San Francisco based-Bingham, Osborn & Scarborough. She expects stock market swings to increase following the early gains of the year.

The S&P 500 reached record highs in April and has risen every month in 2013, gaining 12 percent so far. For the most part, the market has shrugged off any signs of weakness in the economy.

Investors are waiting to see what the Federal Reserve will say about the economy on Wednesday. The Fed will release a policy statement at 2:00 p.m. Eastern time.

Analysts expect the central bank to announce that it will maintain its low interest rate policies, which include an $85-billion-a-month bond-buying program. The Fed's bond purchases are intended to keep interest rates low to spur borrowing, spending and investing. Its policies have helped keep loan rates at record lows.

Company earnings were also in the spotlight Wednesday.

Drugmaker Merck & Co. fell $1.30, or 2.8 percent, to $45.70 after it cut its 2013 profit forecast. The company said competition from generic versions of its drugs and unfavorable exchange rates hurt its profit.

MasterCard eased $9.14, or 1.7 percent, to $543.70 after the payments processing company reported that revenue missed the expectations of financial analysts who cover the firm.

About two thirds of companies in the S&P 500 index have announced earnings for the first quarter.

The quarterly earnings are at record levels, and about seven of 10 companies have topped forecasts of Wall Street analysts, according to S&P Capital IQ data. Revenues have disappointed, though, with about six of 10 companies falling short of expectations. That suggests companies are raising profits through cutting costs rather than boosting revenues.

After companies finish reporting quarterly results, earnings are expected to grow by 3.9 percent in the first quarter. Then they'll accelerate throughout the year, reaching 12 percent growth in the final quarter, according to S&P Capital IQ.

But some market watchers were cautious.

"From here on out, this market expansion story from cost-cutting, it's hard to believe it's going to continue much longer," said Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch. "We need some kind of top-line or demand recovery. If we don't see that, then the equity market is toast."

Government spending cuts will likely slow economic growth in the current quarter, according to the investment bank arm of Bank of America. Growth will pick up toward the end of the year, helped by the housing market's recovery.

Among other stocks making big moves, home security company ADT fell $1.74, or 4 percent, to $41.90 after its profit didn't live up to analysts' hopes.

T-Mobile USA Inc., the combination of T-Mobile USA and MetroPCS, rose 88 cents, or 5.7 percent, to $16.45 on its first day of trading. Goldman Sachs analysts opened their coverage of the stock with a "buy" recommendation and a 12-month price target of $22, predicting that the company will benefit from further consolidation in the industry.

The Nasdaq composite index dropped 14 points, or 0.4 percent, to 3,314.

In government bond trading, demand for the 10-year Treasury note rose, pushing down its yield to 1.63 percent from 1.67 percent. The yield is at its lowest of the year.

Markets in Europe were closed for the May Day holiday.

The start of the new month will also remind investors of the investing adage "Sell in May and go away."

In at least the last two years, stock gains at the beginning of the year have been followed by late spring-early summer swoons. In 2012 stocks plunged in May on growing concern that Spain and Italy would be sucked deeper into Europe's debt crisis. The year before, wrangling about the U.S. debt ceiling rattled markets.

Since 1970, the S&P 500 has generated an annualized return of 4.1 percent from May through October, well below the 17.2 percent annualized return from May through October.

Raging wildfires in South force evacuations in Tennessee
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Fires blaze on the hills above Dollywood’s DreamMore Resort in Pigeon Forge, Tenn. Tuesday morning. Bruce McCamish Photography | The Covington News

ATLANTA (AP) — Raging wildfires fueled by high winds forced the evacuation of thousands of people and damaged hundreds of buildings in a popular resort town on the border of the Smoky Mountains National Park as National Guard troops arrived early Tuesday to help overwhelmed firefighters.

Rain had begun to fall in some areas, but experts predicted it would not be enough to end the relentless drought that has spread across several Southern states and provided fuel for fires now burning for weeks in states including Tennessee, Georgia and North Carolina.

The storms appeared to be taking aim at the nearly 28,000-acre Rough Ridge Fire in north Georgia and the nearly 25,000-acre Rock Mountain Fire that began in Georgia and then spread deep into North Carolina.

In Gatlinburg, Tennessee, officials said hundreds of homes and other buildings, including a 16-story hotel, were damaged or destroyed by flames. And preliminary surveys indicated that Westgate Resorts, with more than 100 buildings, and Ober Gatlinburg were both likely destroyed, according to a news release Tuesday morning.

Emergency officials ordered evacuations in downtown Gatlinburg and Pigeon Forge and in other areas of Sevier County near the Smoky Mountains while crews continue to battle the blaze, which also had crept to the edge of the Dollywood theme park. About 14,000 residents and visitors were evacuated from Gatlinburg alone, officials said.

No deaths have been reported, though several people were hospitalized with burns, emergency officials said in the news release.

Officials say there are about 1,200 people sheltering at the Gatlinburg Community Center and the Rocky Top Sports Park. Several other shelters have opened to house those forced from their homes. TV broadcasts showed residents streaming out of town just as rain started to wet roads.

Workers at an aquarium evacuated because of the wildfires were concerned about the thousands of animals housed there. Ryan DeSears, general manager of Ripley's Aquarium of the Smokies, told WBIR-TV the building was still standing and all workers had been evacuated late Monday. However, he said workers were anxious to return to check on the well-being of the 10,518 animals.

The rain forecast "puts the bull's-eye of the greatest amounts right at the bull's-eye of where we've been having our greatest activity," said Dave Martin, deputy director of operations for fire and aviation management with the southern region of the U.S. Forest Service.

The projected rainfall amounts "really lines up with where we need it," Martin said Monday. "We're all knocking on wood."

After weeks of punishing drought, any rain that falls should be soaked up quickly, forecasters said. It will provide some relief but won't end the drought — or the fire threat, they said.

Drought conditions will likely persist, authorities said. The problem is that rainfall amounts have been 10 to 15 inches below normal during the past three months in many parts of the South, authorities said.

"I think we racked up deficits that are going to be too much to overcome with just one storm system," said Mark Svoboda, director of the National Drought Mitigation Center in Lincoln, Nebraska.

"I would say it's way too early to say 'Yes, this drought is over,'" Svoboda said. "Does it put a dent in it? Yes, but we have a long ways to go."

The rain also brings danger because strong winds at the leading edge of the storms can topple trees and limbs that can kill and injure firefighters, he said.

In Mississippi, trees were reported downed Monday in nearly 20 counties across the state. Sustained winds of 30 to 40 mph with gusts of more than 50 mph were reported and more than 2 inches of rain fell in some areas.

Power outages peaked at more than 23,000 statewide in Mississippi. Powerlines downed by winds sparked grass fires in four counties, said Greg Flynn, a spokesman for the Mississippi Emergency Management Agency.

The storms moved across Alabama on Monday night and fell on Georgia during the overnight hours. High wind warnings were issued for mountainous areas in northern parts of Georgia.

In South Carolina, the stormy forecast was giving hope to firefighters battling a blaze in the northwest corner of the state. The South Carolina Forestry Commission hopes to contain the Pinnacle Mountain fire by the middle of next week.
More rain was expected Tuesday night and Wednesday morning in parts of Louisiana, Mississippi and Alabama.
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Fuller reported from New Orleans. Associated Press writers Rebecca Yonker in Louisville, Kentucky; Jeff Amy in Jackson, Mississippi; Beth Campbell in Louisville, Kentucky; and Jack Jones in Columbia, South Carolina, contributed to this report.