Economic report reverses brief market surge
By Amy Baldwin
|A clerk kept an eye on stock prices on the floor of the New York Stock Exchange yesterday, where an early surge was brought down by a disappointing economic report.
Prices were mixed, with tech stocks again one of the strongest sectors.
Stocks fell back after a weaker-than-expected reading on manufacturing. Analysts said investors also were second-guessing weekend retail sales figures, wondering if the strength was artificial.
"The market is still looking for any reason to keep on going up; that is why it seized on a very strong retail sales number. But then you had questions: Was it strong because the (shopping) season is a week shorter this year? Or was it strong because retailers were putting things on sale?" said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.
The Dow closed down 33.52, or 0.4 percent, at 8,862.57, having gained as much as 147.28 earlier when it moved past 9,000. The Dow, up for eight straight weeks, last traded above 9,000 on Aug. 27, when it hit 9,040.04, but has not closed above that mark since Aug. 22, when it traded at 9,053.64.
The market's broader gauges, up for seven of the last eight weeks, were mixed. The Nasdaq composite index rose 6.02, or 0.4 percent, to 1,484.80. The Standard & Poor's 500 index fell 1.78, or 0.2 percent, to 934.53.
"We have had a nice little rally. It can't go up by dramatic amounts every day," said Susan L. Malley, chief investment officer for Malley Associates Capital Management in New York.
Investors were conflicted yesterday tempted to take profits from weeks of rallies, but also tempted to buy stocks after Dow Jones News reported retail sales hit an estimated $7.4 billion during the weekend, a 12.3 percent increase over 2001.
"Considering the kind of advance we had, you can find some advocates for continuing to take some profits and some for buying on dips. You have both going on here," Cecin said.
Among yesterday's winners, Wal-Mart rose 22 cents to $54.38, falling back from an earlier gain of $2.77. Wal-Mart set a record for one-day sales on Friday, generating $1.43 billion.
J.C. Penney, which also reported record sales for the Thanksgiving weekend, advanced 84 cents to $24.57, retreating from an earlier gain of $1.49.
The market gave back much of yesterday's big gains after the Institute of Supply Management reported its manufacturing business index rose to 49.2 in November from 48.5 in October. The reading was weaker than economists had predicted. A reading below 50 this is the third in a row also points to contraction in the manufacturing sector.
Manufacturing stocks fell after the news. Caterpillar declined 68 cents to $49.22 and 3M fell $1.50 to $128.35.
Tech stocks rose, including Intel, up 17 cents at $21.05, and Advanced Micro Devices, up 43 cents at $8.93, following upgrades by Lehman Brothers.
Technology has enjoyed the biggest gains on Wall Street in the past two months, a sign that investors are growing more confident about the market and the economy. Investors' recent optimism is owed largely to surprisingly strong third-quarter profits and hopes for 2003.
In other economic news, the Commerce Department reported construction spending rose 0.3 percent in October, slightly better than expected.
Advancing issues outnumbered decliners about 7 to 6 on the New York Stock Exchange. Volume was moderate, at 1.54 billion shares, ahead of 637.53 million Friday, when the market had a half-day of trading.
The Russell 2000 index of smaller company stocks rose 2.18, or 0.5 percent, to 408.54.
Overseas, Japan's Nikkei stock average finished yesterday down 0.5 percent. In afternoon trading in Europe, France's CAC-40 declined 0.4 percent, Britain's FTSE 100 fell 0.8 percent and Germany's DAX index rose 1.8 percent.