Posted on: Thursday, January 10, 2002
Stocks sluggish as investors cash in on last week's rally
By Lisa Singhania
Associated Press
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NEW YORK — Wall Street meandered through a lackluster session today, unimpressed by better-than-expected retail sales and a drop in unemployment claims that indicated the economy might be turning around.
The major indexes showed little change in sluggish trading that analysts attributed to profit-taking from last week's big rally. They also said investors are waiting to see more fourth-quarter results before making substantial commitments to stocks.
The Dow Jones industrial average closed down 26.23, or 0.3 percent, at 10,067.86, according to preliminary calculations.
Broader stock indicators fared moderately better. The Standard & Poor's 500 index gained 1.41, or 0.1 percent, to 1,156.55, while the Nasdaq composite index advanced 2.35, or 0.1 percent, to 2,047.24.
"A lot of people had a really lousy year last year, and they think, 'I've got these really nice gains. Why not go ahead and book some of them?"' said Richard A. Dickson, technical analyst at Hilliard Lyons.
The approach of fourth-quarter earnings reports this month also prompted caution among investors.
Unlike last week, when general enthusiasm about a 2002 recovery propelled the market higher, buyers now want more specifics. They hope the reports will give them a better idea of exactly when business will begin to grow, and at what rate.
"There had been a debate about whether we were in a recession. That has abated. Now the question is how strong the recovery is going to be," said John Forelli, portfolio manager for the John Hancock Core Value Fund. "It's always easy to bet on recovery until you get earnings reports. The fear is they won't be so good or won't show the kind of improvement you want."
After advancing rapidly during the holidays, the major indexes have pulled back and now are hovering in the range they were before Christmas; about 10,000 for the Dow and 2,000 for the Nasdaq.
Even better-than-expected unemployment and retail figures today weren't enough to incite buying — although a few weeks ago the same information might have been enough to start a rally.
The Labor Department reported that new claims for unemployment benefits fell by 58,000 last week to 395,000, the lowest level in three weeks.
Retail sales for December also were stronger than expected, particularly for discounters. Those figures are closely watched because consumer spending accounts for two-thirds of the economy.
Wal-Mart rose 60 cents to $57.00 on news its December sales rose 8 percent in stores open at least a year, more than 2 percent above analyst expectations.
Investors also rewarded retailers that didn't fare as poorly as anticipated.
Gap gained $1.83 to $16.35 after reporting an 11 percent drop in December sales at stores open at least a year; analysts had predicted an 18 percent decline.
Technology stocks, among the biggest beneficiaries of the recent advance, sagged for a third session.
IBM fell $2.35 to $122.14, while Intel lost 71 cents to $34.65.
Financial stocks fared better. American Express gained 62 cents to $37.77.
Declining issues led advancers 8 to 7 on the New York Stock Exchange. Volume came to 1.28 billion shares, compared with 1.45 billion yesterday.
The Russell 2000 index advanced 0.57 to 495.31.
Overseas, Japan's Nikkei stock average fell 1.2 percent. In Europe, Germany's DAX index lost 1.3 percent, Britain's FT-SE 100 slipped 1.1 percent, and France's CAC-40 dropped 1.6 percent.
