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The Honolulu Advertiser

Posted at 11:49 a.m., Monday, December 31, 2001

Stock market ends year with a whimper

 •  Hawai'i Stocks
 •  Updated Market Chart

By Lisa Singhania
Associated Press

NEW YORK — Wall Street ended one of its most dreadful years on a down note as investors sent stocks sharply lower today to minimize their tax bills.

The selloff seemed an appropriate finish to 2001 for the market, which saw its major indexes lose ground for a second straight year — their worst performance in nearly three decades.

But despite the yearend decline, analysts said investors, holding on to the optimism that marked trading in recent weeks, were already focusing on next year.

"2001 was a year to forget and 2002 is a year to look forward to," said Alan Ackerman, market strategist with Fahnestock & Co.

The Dow Jones industrial average closed down 115.42, or 1.1 percent, at 10,021.57, according to preliminary calculations.

Broader stock indicators also fell. The Standard & Poor's 500 index lost 12.94, or 1.1 percent, to 1,148.08, while the Nasdaq composite index fell 36.82, or 1.9 percent, to 1,950.44.

For the year, the Dow dropped 7 percent, the Nasdaq lost 21 percent and the S&P fell 13 percent. The last time all three indexes fell for two consecutive years was in 1973 and 1974. (The Dow also dropped in 1977 and 1978, but the other indexes did not have a two-year losing streak.)

Trading volume was light throughout the session as many investors took the day off ahead of the New Year's holiday. Fewer buyers and sellers made stocks more susceptible to sharp spikes or declines.

Monday was also the last day for investors to sell stocks for any tax write-offs on their 2001 taxes, so analysts weren't surprised that the market fell.

Much of the selling was focused in the technology sector. Gateway slipped 30 cents to $8.04, while Microsoft fell $1.60 to $66.27. Nine states today opposed a Microsoft request for more time to produce evidence in the antitrust case against the company.

Retailers also suffered. The Gap fell 7 cents to $13.94, while Wal-Mart dropped 80 cents to $57.55.

America West rose $1.03 to $3.50 after the troubled airline won approval Friday for $380 million in lending guarantees under a $10 billion government package. Congress passed the package in response to the Sept. 11 terrorists attacks.

Analysts said Monday's trading was typical of end-of-the-year trading, but does not indicate what is to come in 2002. Instead, they said, the market appears poised for a relatively strong start to the New Year. Economic data is improving and corporate forecasts appear to at least be stabilizing.

Indeed, since the market has regained all of its losses from the precipitous decline that followed the terrorist attacks. In the last three months, the Dow has climbed nearly 22 percent, the Nasdaq is up more than 37 percent and the S&P has advanced almost 19 percent.

Stocks have since hovered in a narrow trading — about 10,000 on the Dow, near 2,000 for the Nasdaq — but most market watchers agree that more gradual progress forward is likely.

"The market fundamentals favor a better 2002. Earnings appear to be bottoming out and the economic news is improving," said Brian Belski fundamental market strategist at US Bancorp Piper Jaffray. "There's also a tremendous amount of cash sitting on the sidelines waiting to participate. The rally so far has been from institutional buying, now we should start seeing retail or individual investors come in."

Also Monday, the market shrugged off news that Argentina's interim president was resigning after barely a week in office. Adolph Rodriguez Saa blamed a lack of party support for his decision. He had replaced President Fernando De la Rua, who was forced out of office because of the country's economic woes.

Declining issues led advancers narrowly on the New York Stock Exchange. Volume came to a relatively light 943.69 million shares, compared with 900.63 million Friday.

The Russell 2000 index dropped 5.12 to 488.50.