Closing Market Report

Star-Bulletin news services

Thursday, May 30, 2002

Stocks end mixed;
Dow posts 4th loss

By Amy Baldwin
Associated Press

NEW YORK >> Another spate of bad news -- this time, forecasts of disappointing retail sales and a downgrade of AT&T's debt by Moody's Investor Service -- prompted investors to play it safe yet again today, leaving the stock market narrowly mixed. Blue chips fell for a fourth straight session.

"Investors are uncomfortable, uneasy, nervous," said Hugh Johnson, chief investment officer at First Albany Corp.

Still, it was Wall Street's best session in four days as technology eked out a modest gain while blue chips posted their smallest loss in four days.

"It doesn't change the tone, but it is kind of encouraging to get through a day without getting pummeled," Johnson said, referring in part to the Dow Jones' triple digit losses on Friday and Tuesday and 58-point drop yesterday.

The Dow closed with a loss of 11.35, or 0.1 percent, at 9,911.69. The Dow lost 304.39 in the past four sessions.

The market's broader indicators were mixed. The Nasdaq composite index rose 7.52, or 0.5 percent, to 1,631.91, a minor comeback from a three-session loss of 73.24. The Russell 2000 index inched up 0.23, or 0.05 percent, to 487.83.

But the Standard & Poor's 500 index declined 3.00, or 0.3 percent, to 1,064.66. The S&P has fallen 32.42 in the past four sessions.

Declining issues outnumbered advancers about 9 to 7 on the New York Stock Exchange where volume was light at 1.22 billion shares, up from 1.06 billion yesterday.

The price of the Treasury's 10-year note was up 1/4 point to 98 13/16 today, while its yield fell to 5.03 percent from 5.07 percent yesterday. Two-year Treasury notes were up 3/32 point and their yield fell to 3.09 percent from 3.15 yesterday.

The entire market had been falling since Friday on a series of negative corporate developments. The latest was news that Moody's Investor Service had reduced its credit rating on AT&T's debt to two notches above junk status. AT&T slipped 4 cents to $11.97.

Retailers expected to release their May sales figures next Thursday fell after Merrill Lynch said business would be below expectations for many companies. In a research note, the investment firm said cooler weather put second-quarter earnings "in jeopardy"

Talbots dropped $1.46 to $36, and AnnTaylor fell $1.07 to $28.30. Both clothing retailers were also downgraded to "hold" from "buy" by Prudential Securities.

The companies that led yesterday's sell-off fell again today. Novellus stumbled 35 cents to $43.05, hurt again by a mixed earnings forecast. And Halliburton, which Wednesday became the latest company following Enron's collapse to face questions about its accounting, declined 23 cents to $18.49.

Analysts said the selling reflects investors growing skepticism about the speed of the economic recovery, and their doubts about an earnings improvement by late this year.

"All the expectations that the second half (of 2002) would be stronger have faded. We aren't seeing any clear indication that that will be the case," said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky.

Typically, after a string of losing sessions, the market is primed for a rally, but analysts aren't certain that's going to happen. "The question is at what discounted price do investors come back into the market," Dickson said.

Among the winners today were food and consumer product companies, which rose on a variety of positive news. Starbucks advanced 57 cents to $23.57 after J.P. Morgan raised its rating on the stock to "buy" from "market perform."

Dow industrial Philip Morris rose 57 cents to $56.58 after announcing it was selling its Miller Brewing unit to South African Breweries PLC for $5.6 billion.

Computer stocks helped lift the tech sector. Dell Computer rose 44 cents to $27.02, and Apple gained 22 cents to $24.20. Brokerage house Thomas Weisel began coverage of both stocks by rating the shares "attractive."

Overseas, markets were lower. Japan's Nikkei stock average finished Thursday down 0.7 percent. In Europe, France's CAC-40 fell 1.7 percent, Britain's FTSE 100 lost 0.8 percent, and Germany's DAX index dropped 2.5 percent.

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