Closing Market Report

Star-Bulletin news services

Tuesday, April 24, 2001

Stocks drop
amid lagging

By Amy Baldwin
Associated Press

NEW YORK >> Stocks gave up early gains and closed moderately lower today as poor earnings reports weighed on investors, prompting them to again cash in recent profits.

Investors were torn between their newfound optimism about earnings and the economy and fears that it will be much longer before the business environment improves.

The Dow Jones industrial average lost 77.89 to close at 10,454.34. Investors became more cautious as the session progressed, pulling back after sending the Dow up as much as 106.83 earlier. The Nasdaq composite index fell 42.71 to 2,016.61 while the Standard & Poor's 500 slipped 14.89 to 1,209.47. Advancers edged decliners 8 to 7 on the New York Stock Exchange, with 1,540 up, 1,518 down and 240 unchanged. Volume was $1.4 billion vs. $1.2 billion yesterday.

The NYSE composite index fell 4.80 to 613.97, the American Stock Exchange composite index lost 0.67 to 902.87 and the Russell 2000 index rose 1.28 to 462.35. The Treasury's 10-year note fell 1/8 to 98 13/32; its yield rose 3 basis points to 5.21 percent. The 30-year bond fell 17/32 to 94 18/32; its yield rose 4 basis points to 5.76 percent.

Analysts expected the decline after last week's big rally in which the Dow gained 452 points and the Nasdaq picked up 201. "We did make a pretty giant leap. I think we are just consolidating," said Steven Goldman, market strategist for Weeden & Co.

He and other analysts also said that the profit-taking had little to do with a report by the Conference Board that consumer confidence dropped significantly in April. Investors believe the decline should give the Federal Reserve greater incentive to lower interest rates for the fifth time this year when it meets in mid-May.

Wall Street, which last week ended its two best weeks of the year on positive earnings news and an unexpected rate cut by the Fed, is having conflicted emotions about the economy -- while hoping that business and earnings will turn around soon, investors also are fearful that a recovery could take much longer.

"Fed rate cuts are pluses for the economy, but they take time to work their way through the system," said Alan Ackerman, executive vice president of Fahnestock & Co.

Consumer products maker Kimberly Clark plunged $6.17 to close at $56.61 after missing expectations by a penny a share.

JDS Uniphase tumbled $3.34 to $20.84 after announcing it would restructure its business, laying off 20 percent of its work force and closing several operations. Although earnings for its third quarter, which ended March 31, met forecasts, the company said it anticipates fourth-quarter profits to be 5 cents a share, 7 cents shy of expectations.

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