Stocks retreat amid
military uncertainties

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By Amy Baldwin
Associated Press

NEW YORK >> Wall Street maintained a low profile today with cautious investors selling stocks moderately lower on an unsurprising Supreme Court ruling on Microsoft and taking profits from the market's recent rally.

The pullback was expected given recent gains, notably five consecutive wins for the Nasdaq composite index, and political uncertainty as the United States continues its military strikes in Afghanistan, retaliating for the Sept. 11 terrorist attacks.

The Dow Jones industrial average closed down 15.50 at 9,052.44, having gained 272.21, or 3.1 percent, last week. Microsoft was easily the weakest Dow industrial, falling $3.48, or 6 percent, to $54.56 after the Supreme Court said it would not hear the software maker's appeal of its antitrust case, a decision analysts said the market expected.

The broader market was also weaker. The Nasdaq fell 35.78 to 1,570.17, having claimed a five-day winning streak yesterday for the first time since the week of June 25. The Standard & Poor's 500 index, considered the best measure of Wall Street's performance, declined 5.69 to 1,056.75.

Declining issues outnumbered advancers nearly 8 to 7 on the New York Stock Exchange, with 1,595 down, 1,490 up and 211 unchanged. Volume was 1.22 billion shares.

The NYSE composite index lost 53 cents to 548.63, the American Stock Exchange composite index rose 4.20 to 834.33 and the Russell 2000 index, the gauge of smaller company stocks, fell 3.52 to 408.66.

While analysts were encouraged by the market's recent strides, they don't expect the market to move much higher until next year. The best investors can expect are the low levels seen just before the attacks when investors sold off shares in anticipation of companies' dreadful third quarter results, analysts said.

"The market is holding up in the respect that we are settling into a trading range. We are right around where we were before the Sept. 11 date when we had the capitulation," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. The Dow is about 600 points below its Sept. 10 close, while the Nasdaq is down about 120 points.

Analysts also said it was hard to discern what factored most into today's modest downturn as investors refrained from making major commitments, keeping trading volume lighter than it has been recently. Investors seemed to be waiting and watching, putting off big decisions to await news on the political and economic fronts.

"It is really difficult to get a handle on this market. Volume has slowed and it's hard to get a feel for this market," said Ricky Harrington, a technical analyst for Wachovia Securities.

Harrington expects the market to trade in a tight range of about 200 to 300 points each for the Dow and the Nasdaq.

"But the next 200 or 300 points could be in either direction. There is no way to predict," Harrington said, citing the political uncertainty as the biggest factor weighing on the market.

Tech stocks were the market's weakest spot today, falling on the Microsoft news as well as downgrades by brokerage houses.

Semiconductor companies and those that make equipment for the industry suffered after a cautious research note by Merrill Lynch. Chip maker Intel, also a Dow industrial, fell 79 cents to $21.45, while equipment maker Applied Materials tumbled $2.71 to $31.15.

Networkers traded lower after JP Morgan reduced its rating and earnings estimates on several companies and said it is premature to say the industry has bottomed. Juniper Networks stumbled 39 cents to $14.85, while Cisco Systems declined 46 cents to $14.59.