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The Honolulu Advertiser

Posted at 11:48 a.m., Tuesday, January 27, 2004

Stocks pull back after previous gains

Hawai'i Stocks
Updated Market Chart

By Meg Richards
Associated Press

NEW YORK — Investors intent on preserving profits looked past positive earnings reports today and sent stocks sharply lower. Technology stocks saw steep declines on a disappointing outlook from chip maker Novellus Systems Inc.

After the previous session’s rally, when the Dow Jones industrial average reached its highest level in 31 months, not even solid results from five blue-chip companies could stop the declines. A consumer confidence reading that missed expectations and jitters about the Federal Reserve’s expected statement tomorrow on interest rates contributed to the decline.

Still, with results from most companies beating Wall Street’s forecasts, most traders and analysts remained optimistic about the long term.

"We’re still in a good environment, we’re still in an upward trend," said Todd Leone, managing director of equity trading at SG Cowen Securities. "I like to see us go down a little bit, actually, it’s healthy. You don’t want to see the market going in a straight line up."

According to preliminary calculations, the Dow Jones industrial average closed down 92.59, or 0.9 percent, at 10,609.92.

The broader gauges also closed lower. The Nasdaq composite index closed down 37.79, or 1.8 percent, at 2,116.04. The Standard & Poor’s 500 index closed down 11.32, or 1 percent, at 1,144.05.

Strong corporate earnings, encouraging economic data and Fed chairman Alan Greenspan’s expression of confidence about the job market helped all the major indexes reach significant highs yesterday.

While some investors were locking in gains today, others were keeping a close eye on the Fed meeting. With a weak jobs picture and low inflation, most economists believe policy makers will keep interest rates at their current low levels.

Separately, the Conference Board reported today that its consumer confidence index rose in January to its highest level since mid-2002. The business group said the index rebounded to 96.8 following a dip in December to a revised reading of 91.7. Still, it missed the 99.0 reading forecast by analysts.

The economic data, along with an avalanche of earnings results coming in this week from more than 130 companies in the S&P 500, is a lot for investors and financial professionals to digest, said Bill Meade, managing director for RBC Capital Markets. That can translate to volatility in the marketplace.

On the Nasdaq, Novellus Systems closed down $5.85, or 15 percent, at $34.40, after reporting profits that beat its own estimates and Wall Street’s expectations, but a weaker outlook for the year.

Decliners outnumbered advancers about 4 to 3 on the New York Stock Exchange. Volume was lighter than during Monday’s session.

The Russell 2000 index, which tracks smaller company stocks, was down 6.33, or 1 percent, at 595.17.

Japan’s Nikkei stock average finished 0.4 percent lower.