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Posted at 1:21 p.m., Friday, August 22, 2003

Stock prices slip lower as advance loses steam

Hawai'i Stocks
Updated Market Chart

By Amy Baldwin
Associated Press

NEW YORK — Wall Street’s advance stalled today, running into expected resistance following weeks of gains. Stocks fell sharply as a mostly upbeat outlook from Intel failed to give the market a sustainable boost.

"The bulls look a little tired here," said Bryan Piskorowski, market commentator for Prudential Securities.

The market’s good mood was tempered by a note of caution in Intel’s outlook and by light trading, as many traders were away on vacation. Analysts also said stocks have little room to move higher right now, with indexes trading at levels not seen in more than a year. Earlier this week, the Nasdaq composite index reached its highest point in 16 months, while the Dow Jones industrial average finished at a level last achieved 14 months ago.

"We have had a huge move off the bottom. It’s going to take stronger earnings to help these averages go higher," said John Waterman, chief investment officer at Rittenhouse Asset Management.

After rising as much as 76.29, the Dow closed down 74.81, or 0.8 percent, at 9,348.87, according to preliminary calculations. The Nasdaq fell 12.24, or 0.7 percent, to 1,765.31, forfeiting an early lead of 34.94.

The Standard & Poor’s 500 index dropped 10.42, or 1 percent, to 992.85.

Wall Street has generally moved higher over the past few weeks as companies reported better-than-expected second-quarter earnings and some increased their estimates for future quarters.

Despite today’s losses, the three main stock gauges ended a second straight week higher. The Nasdaq jumped 3.7 percent, Dow advanced 0.3 percent and the S&P rose 0.2 percent.

Market observers had been expecting stocks to pull back somewhat now that quarterly earnings season is practically over and prices have risen so strongly.

"We’ve had such a nice run here. This is the question you are running up against: How much of this (economic) recovery have we priced into the market," Piskorowski said.

Intel advanced $1 to $27.39 after raising its third-quarter sales forecast and saying its processor business is trending higher, although demand for communications products is still soft.

The chipmaker said it expects revenue in the current quarter to range between $7.3 billion and $7.8 billion, up from its previous forecast of $6.9 billion to $7.5 billion. The new sales estimate also tops the $7.24 billion analysts had forecast.

Intel’s news boosted Advanced Micro Devices, one of its competitors. AMD advanced 48 cents to $9.91.

Meanwhile, Schering-Plough dropped $1.52 to $14.96, having announced major restructuring plans late yesterday. The pharmaceutical company said it would cut 1,000 jobs, do away with bonuses and reduce dividends.

Other drug makers also edged lower, including Eli Lilly, down 76 cents at $62.80, and Aventis, down 47 cents at $49.12.

Retailer Kirklands fell 85 cents to $16.15 after CIBC World Markets downgraded it to "sector perform" from "sector outperform," saying the company was fairly valued given its volatility.

Declining issues outnumbered advancers more than 5 to 2 on the New York Stock Exchange. Trading volume was moderate.

The Russell 2000 index, the barometer of smaller company stocks, fell 3.95, or 0.8 percent, to 485.51.