Star-Bulletin news services
Wall Street heads lower
on profit taking, jobless reportNEW YORK >> Concerned that stocks are overpriced after this week's big rally, investors collected profits today, sending Wall Street moderately lower. A surge in unemployment claims and disappointing earnings reports also fed worries that the economy wasn't keeping pace with the market's gains.
Declining issues outnumbered advancers slightly more than 4 to 3 on the New York Stock Exchange. Volume was moderate.
The Dow Jones industrial average closed down 75.62, or 0.9 percent, at 8,440.04. The pullback followed a two-day gain of 186.76.
The broader market also retreated. The Nasdaq composite index fell 8.93, or 0.6 percent, to 1,457.23, following a two-day gain of 41.79 that allowed it to close yesterday at its highest level since Dec. 2. The Standard & Poor's 500 index declined 7.59, or 0.8 percent, to 911.43, having risen 27.01 in the previous two sessions. The Russell 2000 index fell 2.70, or 0.7 percent, to 392.27.
The price of the Treasury's 10-year note was up 9/16 point, while its yield fell to 3.90 percent from 3.98 percent yesterday. The price of two-year Treasury notes was unchanged, but their yield fell to 1.61 percent, down from 1.64 percent yesterday.
The losses were largely attributable to a natural pullback following two days of rallies, but also reflected investors' discomfort with current stock valuations. Still, analysts expect the market to resume its upward track given how first-quarter earnings results have for the most part exceeded Wall Street's expectations.
"At this point, we would avoid chasing stocks but wait for at least one to two days of market weakness before buying," said Richard A. Dickson, senior market strategist, at Lowry's Research Reports in Palm Beach, Fla., in his daily market report.
Investors were also motivated to sell today by a Labor Department report that the number of Americans filing new claims for unemployment rose by 8,000 last week to 455,000, the highest level in a year.
There was some good economic news, however. The Commerce Department said orders to U.S. factories for durable goods, those items expected to last at least three years, rose by an unexpected 2 percent in March. Analysts had forecast a decline of 1 percent. Still, the strong reading was somewhat lessened by the fact that much of it was due to a surge in demand for military equipment needed for the war in Iraq, not to businesses and consumers buying more big-ticket items.
Reports on economic activity for April and May will be even more important to investors looking to figure out whether the war had a short-term negative effect on business or whether there is something more fundamentally wrong, market observers said.
Profit taking contributed to today's losses. BellSouth fell 67 cents to $23.54 after rising $2.50 yesterday on profits that topped Wall Street's forecast by 6 cents a share.
Overseas, Japan's Nikkei stock average finished up 0.8 percent. In Europe, France's CAC-40 shed 2 percent, Britain's FTSE 100 fell 1.7 percent and Germany's DAX index lost 2.8 percent.
STOCK QUOTES/CHARTS/DATA
