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Closing Market Report

Star-Bulletin news services

Tuesday, May 7, 2002


Dow holds onto gain
but Nasdaq sinks again


By Amy Baldwin
Associated Press

NEW YORK >> Choosey bargain hunters surfaced today on Wall Street, bidding blue chips higher following an extended sell-off that had sent stocks to their lowest levels in months. But technology stocks fell for the fifth straight day.

The market ended mixed, pulling back from a stronger, universal upturn from earlier that was fueled by stronger-than-expected worker productivity numbers. Wall Street retreated after the Federal Reserve announced that it was leaving interest rates unchanged.

"This was pretty much as expected, and so the market certainly did not sizzle. ...The real issue at the moment seems to be just how long it will take until the economic recovery gets under gear. Until then, it seems the Fed at least is not going to raise rates until August or September," said Alan Ackerman, executive vice president of Fahnestock & Co.

The Dow Jones industrial average closed up 28.51 at 9,836.55, giving up an earlier gain of 110.92. The Dow yesterday tumbled 198.59 to its lowest close since Feb. 19.

But the broader market gave up its advance and finished lower. The Nasdaq composite index fell 4.66 to 1,573.82, after rising as much as 16.09.

The Nasdaq has fallen for five straight sessions, sliding 159.66 and trading at levels not seen since early October. Today marked the Nasdaq's 13th losing session out of the last 15.

The Standard & Poor's 500 index declined 3.18 to 1,049.49, having gained 6 points earlier. The S&P lost 20.76 yesterday.

Decliners outnumbered advancers slightly more than 8 to 7 on the New York Stock Exchange, with 1,783 down, 1,400 up and 223 unchanged. Volume was 1.34 billion shares.

The NYSE composite index fell 2.33 to 565.35, the American Stock Exchange composite index lost 2.96 to 946.10 and the Russell 2000 index fell 3.93 to 498.98.

The Treasury's 2-year note rose 2/32 to 100 1/2; its yield fell 3 basis points to 3.10 percent. The 10-year note gained 18 to 98 22/32; its yield lost 2 basis points to 5.05 percent. The 30-year bond rose 18 to 9 72 532; its yield fell 1 basis points to 5.53 percent.

While the Fed's decision was what the market expected, it still soothed investors' fears that interest rates could increase before the economy has markedly improved.

Overall, investors got what they what they wanted from the Fed, which was some "confidence that the recovery is gaining traction but at the same time, no raise in rates," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston. But other analysts attributed the bulk of the market's advance to a positive economic report from the Labor Department, which said worker productivity rose at an annual rate of 8.6 percent in the first quarter. Analysts were expecting a 7 percent gain.

The tech sector stumbled, showing its vulnerability to investors' growing fears of a belated rebound. Dell Computer fell $1.42 to $22.33, while PMC-Sierra fell 46 cents to $12.99.

Dow industrial Hewlett-Packard gained 19 cents to $18.41 after Morgan Stanley raised its rating on the printer maker's stock to "overweight" from "equal weight."



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