Wall Street takes
breather after rally

Associated Press

NEW YORK >> Stocks edged lower today as some investors locked in gains from last week's rally while others took a cautious stance ahead of some key reports and next week's Federal Reserve meeting.

The Dow Jones industrial average fell 16.07 to 10,935.17 after retreating from an early 44 point advance.

Broad-market indicators also surrendered modest morning gains. The Nasdaq composite index, which rose 5.6 percent last week and has bounced 34 percent from its low point in early April, slipped 17.96 to 2,173.57. The Standard & Poor's 500 index fell 3.10 to 1,263.51.

The NYSE composite index lost 1.03 to 639.02, the American Stock Exchange composite index fell 2.67 to 935.47 and the Russell 2000 index dropped 3.25 at 489.64.

Decliners beat advancers 5 to 4 on the New York Stock Exchange, with 1,598 down, 1,455 up and 211 unchanged. Volume was 928.92 million vs. 1.08 billion on Friday. The Treasury's 10-year note rose 2/32 to 98 17/32; its yield fell 1 basis point to 5.19 percent. The 30-year bond rose 1/8 to 95 26/32; its yield fell 1 basis point to 5.67 percent.

With no new reports to steer sentiment, may investors took to the sidelines, mindful of some data due later in the week that may sway Fed officials on whether to keep cutting interest rates to revive the economy.

Alfred E. Goldman, director of market analysis for A.G. Edwards & Sons Inc. in St. Louis, Mo., said it was understandable for traders "to take a little time out after the rally on Friday."

With investors "transitioning from bearish to bullish," he said, the market can be expected to trade "in a choppy fashion between now and the expected rate cut a week from Tuesday."

Energy stocks were prominent on the most active lists with the announcement of two mergers.

Williams Cos. of Tulsa, Okla., said today it will buy natural gas producer Barrett Resources for $2.5 billion in cash and stock, topping a $2 billion hostile bid by the U.S. unit of Royal Dutch/Shell Group. Barrett's stock rose $2.89 to $70.19, while Williams' stock was down $2.63 at $39.04.

Meanwhile, Valero Energy Corp. said it was buying Texas rival Ultramar Diamond Shamrock Corp. for about $4 billion in cash and stock in a deal that will make Valero the second-largest U.S. refiner of petroleum products. Valero's shares dropped $2.74 to $42.73, while Ultramar's were up $7.86 at $50.57.

Bank shares took a hit after Prudential cut its investment rating for J.P. Morgan Chase to "sell" from "hold." J.P. Morgan, a Dow component, was down $l.52 at $49.08.

Lucent Technologies shares fell 65 cents to $10.50 after the company said its chief financial officer was replaced after just a year on the job.

Honolulu-based Schuler Homes, which soared 20.2 percent last week following takeover activity in the homebuilding industry, continued rising today and closed up 14.6 percent, or $2.05, at $16.11.