Closing Market Report

Star-Bulletin news services

Monday, December 24, 2001

Dow unchanged in sluggish
pre-holiday trading

By Lisa Singhania
Associated Press

NEW YORK >> Wall Street held steady today, helped by buying in oil stocks on anticipation OPEC would cut its output and oil prices would stabilize.

Worries about security after a reported bombing attempt aboard a U.S. passenger plane hurt some airline stocks, but failed to send the broader market lower.

The Dow Jones industrial average closed unchanged at 10,035.34, after an abbreviated session that ended at 1 p.m. Eastern time (8 a.m. in Hawaii). The stock market will reopen Wednesday following tomorrow's Christmas Day holiday.

Broader stock indicators also stayed in a tight trading range. The Standard & Poor's 500 index lost 0.24 to 1,144.65, and the Nasdaq composite index fell 1.35 to 1,944.48.

Advancers led decliners 4 to 3 on the New York Stock Exchange, with 1,744 up, 1,201 down and 249 unchanged. Volume was 442.46 million shares vs. 1.69 billion Friday. The NYSE composite index gained 0.35 to 586.05, the American Stock Exchange composite index rose 3.76 to 833.91 and the Russell 2000 index was up 1.79 at 485.81. The Treasury's 2-year note fell 2/32 to 99 - 22/32; its yield rose 3 basis points to 3.16 percent. The 10-year note fell 12/32 to 98 - 31/32; its yield rose 5 basis points to 5.13 percent. The 30-year bond fell 21/32 to 98 - 11/32; its yield gained 5 basis points to 5.49 percent.

Analysts weren't surprised by the lackluster session, noting that many on Wall Street are away for the holidays and that there was little significant news to move the market.

"You can't read too much into a half-day of trading before a holiday," said Larry Rice, chief investment officer at Josephthal & Co. "But considering that we still can't find bin Laden and you had some suggestion of terrorist activity over the weekend, the market's doing quite well."

ExxonMobil rose 50 cents to $39 on word that members of the Organization of the Petroleum Exporting Countries are expected to approve an agreement to cut production by 1.5 million barrels a day starting next month. Several non-OPEC countries, including Norway, have also indicated they would reduce their output.

But airline stocks were weak on weekend reports that an airline passenger had tried to detonate plastic explosives in his shoes. Authorities said today they had no evidence to link him to Osama bin Laden's terror network. American Airlines slid 70 cents to $21.19, while competitor Continental lost 68 cents to $24.36. Credit agencies have also downgraded the industry recently on concerns it is too weak to sustain any big problems.

"This is a bit of a knee-jerk reaction, not the story of the market today," said Jim Weiss, chief investment officer for equities at State Street Research and Management. "The market is more listless than anything. There's nothing really going on right now."

Tech stocks, which have pulled back recently as investors consolidate gains from the recent big rally, also lagged. Cisco Systems lost 6 cents to $18.13, while Compaq Computer lost 27 cents to $9.67.

Wall Street shrugged off news that Argentina was defaulting on its debt. Analysts said that's because the announcement wasn't surprising given the country's ongoing financial and political problems. U.S. companies had enough time to reduce their exposure in the region, limiting the fallout to the default.

Barring any significant news, many market watchers expect trading activity to be relatively subdued for the rest of 2001 because of the holidays.

That doesn't mean Wall Street won't face a tough year ahead, however. Major indexes will likely end 2001 below where they started, and there is still concern that current stock prices are too high given the weakness in corporate profits.

Stocks have rallied considerably since the precipitous selloff that followed the Sept. 11 attacks, but have recently been stuck in a narrow trading range. The Dow has hovered around 10,000; the Nasdaq has been unable to move much higher than the 2,000 level.

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