Stocks sell off again
on heels of strong run-up

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By Amy Baldwin
Associated Press

NEW YORK >> Investors' nagging uncertainty about the economy prompted them to collect more profits today, sending stocks down sharply and the Dow Jones industrials tumbling by triple digits for the second straight day.

Analysts said some selling was expected as investors aren't completely convinced the economy will improve in the first half of 2002 as they'd like. For weeks, hopes that business will improve early next year have been boosting the market.

"We're making a bottom, but we're not out of the woods yet," said Richard Jandrain, senior managing director at Banc One Investment Advisors Corp.

The Dow closed down 160.74 at 9,711.86, adding to its 110-point loss from yesterday.

The broader market also suffered. The Nasdaq composite index fell 48.00 to 1,887.97 and the Standard & Poor's 500 index declined 20.98 to 1,128.52.

Decliners outnumbered advancers 2 to 1 on the New York Stock Exchange, with 2,108 down, 1,049 up and 180 unchanged. Volume was 1.39 billion shares vs. 1.30 billion yesterday.

The NYSE composite index fell 9.38 to 575.20, the American Stock Exchange composite index lost 4.17 to 803.99 and the Russell 2000 index fell 7.01, or 1.5 percent, to 453.70.

The Treasury's 2-year note was unchanged at 99 12; its yield stayed at 3.02 percent. The 10-year-note fell 232 to 100 1732; its yield rose 1 basis point to 4.93 percent. The 30-year bond fell 1132 to 100 14; its yield fell 2 basis points to 5.36 percent.

Analysts had expected investors to lock in profits, given how strongly the market has rallied since late September. As of Monday, the Dow had risen 21 percent since closing at a low of 8,235.81 on Sept. 21 following the terror attacks. After two straight triple-digit losses, the blue chips are still about 18 percent above that low.

"After this run we have had, it is normal to have some profit taking regardless if it is a consumer confidence number or whatever the catalyst. The reality is we were due for some pullback," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. He referred to an unexpected drop in consumer confidence reported yesterday by the Conference Board.

Hyman and other analysts were actually pleased to see investors take a cautious step back after fearing that the market was rising too much and too quickly.

The market's softness was spread across most sectors, but one of the weakest spots was utilities, which dropped after Dynegy backed out of its planned merger with Enron. Debt-ridden Enron plunged $3.50 to 61 cents, while Dynegy fell $4.92 to $35.97.

Enron broke the record for heaviest issue ever traded on the New York Stock Exchange with more than 339 million shares changing hands. The previous record was the 304 million shares of Intel traded on Sept. 22, 2000 when the chip maker issued a third-quarter revenue warning. The Dow Jones utilities average fell 2.9 percent, down 8.48 at 279.95.

Gap stumbled 79 cents to $13.61 after Prudential Securities reduced its rating on the clothier to "sell" from "hold" and called its holiday merchandise poor.