Dow falls below 10,000
ahead of Fed meeting

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By Lisa Singhania
Associated Press

NEW YORK >> Wall Street faltered today, sending stocks sharply lower as investors locked in their gains from the recent rally and waited to see if the Federal Reserve would lower interest rates again.

The Dow Jones industrials fell back below 10,000 after closing above the milestone last week for the first time since before the terror attacks. Analysts weren't too concerned, though, saying some pullback was inevitable after the market's recent advance.

The Dow closed down 128.01 at 9,921.45, its third consecutive declining session. The Standard & Poor's 500 index lost 18.38 to 1,139.93. The Nasdaq composite index fell 29.14 at 1,992.12, after finishing above 2,000 last week for the first time since August. Decliners led advancers more than 2 to 1 on the New York Stock Exchange, with 2,163 down, 965 up and 221 unchanged. Volume was 1.18 billion shares vs Friday's 1.24 billion.

The NYSE composite index fell 8.94 to 578.25, the American Stock Exchange composite index fell 4.50 to 819.22 and the Russell 2000 index fell 7.03 to 474.18.

The Treasury's 2-year note rose 10/32 to 99 - 30/32; its yield fell 16 basis points to 3.03 percent. The 10-year note gained 18/32 to 99 - 10/32; its yield fell 8 basis points to 5.09 percent. The 30-year note rose 11/32 to 97 - 11/32; its yield fell 2 basis points to 5.56 percent.

"You've had a huge run here over last 10 weeks," said Steven Goldman, stock market strategist at Weeden & Co. "This just a pause, so the market can rest. But I think we're going to be going back and forth from here for a while. After advancing so much, we can't keep going straight up. "

Indeed, stocks have rallied strongly in recent weeks and some of the recent losses reflect concerns that some of the gains are premature -- particularly with fourth-quarter warnings season just beginning. Since Sept. 21, the day the indexes made their low for the year, the Dow has risen more than 20 percent, while the Nasdaq has gained 40 percent.

In trading today, Compaq Computer fell $1.62 to $9.70 after a key Hewlett-Packard shareholder Friday announced opposition to the planned merger between the two companies. HP lost 52 cents to $23.

Retailing and financial sectors also suffered on worries that the sluggish economy would continue to hurt business for a while. Home Depot dropped $1.15 to $48.26, while American Express fell 70 cents to $34.

Even news that General Electric expected to expects to achieve double-digit earnings growth next year failed to cheer investors. GE dropped 35 cents at $36.80.

But the main focus of the market was on the Fed meeting scheduled for tomorrow, and what many hope will be the 11th interest rate reduction of the year.

The cut is widely expected, although there is some debate over how big it will be. There is also some thought that the reduction could be the Fed's last because rates are already at a 40-year low and companies including Cisco and Oracle have issued relatively upbeat forecasts. In any case, investors were unwilling to make any big moves before the Fed's decision.

Meanwhile, UBS Warburg is preparing to bid for the core trading arm of crippled energy giant Enron but is some weeks away from making a proposal to bankruptcy administrators, according to a source close to the bank. Rivals J.P. Morgan and Citigroup may also be preparing offers for the business that dominated world energy trading until it collapsed amid mounting debts this month, the source said today.

Enron stock rose 4 cents today to 79 cents on the New York Stock Exchange.