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The Honolulu Advertiser

Posted on: Friday, April 16, 2004

Mixed session reflects Wall Street volatility

By Meg Richards
Associated Press

NEW YORK — Wall Street waffled through an indecisive session yesterday, closing mixed as better-than-expected earnings from Apple Computer Inc. and Citigroup were eclipsed by investors' growing anxiety over interest rates.

Financial and tech shares showed particular weakness, while large drug stocks posted gains as investors sought safety in consumer staples, energy and healthcare, which usually do well when rates are rising. The market's muted reaction to earnings news did not surprise analysts, who said share prices already reflect most of the gains that were expected for the first quarter.

"The markets were too enthusiastic, too far ahead of earnings, and they had not factored in other influences — a close election, geopolitics, interest rate changes — and the result is this volatility," said Subodh Kumar, chief investment strategist for CIBC World Markets.

Rate-sensitive financial stocks sank. Citigroup lost $1.03 to $49.92, despite soundly beating analysts' estimates and saying it expects continued growth.

Apple soared $2.66, or 10 percent, to $29.30 as huge demand for its iPod portable digital music players helped it easily beat Wall Street expectations.

Advancing and declining shares were about even on the New York Stock Exchange.

Consolidated volume came to 1.94 billion shares, compared with 1.91 billion shares traded on Wednesday.

Buyers were scarce yesterday in the bond market, where the yield on the 10-year Treasury note rose to 4.40 percent, from 4.37 percent Wednesday. The selling was not dramatic, compared to recent weeks, but bond prices were still "moving in the wrong direction," said Brian Pears, head equity trader at Victory Capital Management in Cleveland.

"It's fair to say equity traders have become somewhat obsessed with the performance of the 10-year note," Pears said. "The macro issues, what's happening with the economy, are swamping the more micro issues of earnings for individual companies, which by and large have been fantastic."