Stocks slip at the end
as investors cash in

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By Amy Baldwin
Associated Press

NEW YORK >> Investors dogged by lingering worries about the economy backtracked from a solid rally on Wall Street today and sold stocks sharply lower in late trading.

Analysts said investors were worried that stocks, which had healthy gains in the first three trading days of the new year, are now priced too high given the uncertainty about when a recovery will begin.

"What I hear over and over again is worries about valuation for the overall market, and particularly in technology. We have come very far, very fast ... and the upside potential is very limited," said Hugh Johnson, chief investment officer at First Albany Corp.

The Dow Jones industrial average recorded its third straight loss, falling 54.46 to 10,094.09 after rising as much as 120 earlier in the session.

The broader market also closed lower. The Nasdaq composite index fell 10.85 to 2,044.89, having climbed as high as 43 earlier. The Standard & Poor's 500 index declined 5.57 to 1,155.14, giving up an earlier lead of 13.

Decliners edged advancers on the New York Stock Exchange, with 1,605 down, 1,533 up and 195 unchanged. Volume was 1.44 billion shares.

The NYSE composite index fell 2.65 to 587.06, the American Stock Exchange composite index rose 4.96 to 841.16 and the Russell 2000 index fell 3.16 to 494.74.

The Treasury's 2-year note rose 1/8 to 100 1/2; its yield fell 7 basis points to 2.99 percent. The 10-year note gained 7/32 to 99 20/32; its yield fell 3 basis points to 5.05 percent. The 30-year bond rose 15/32 to 98 1/4; its yield fell 3 basis points to 5.50 percent.

The market's earlier gains were attributed in part to a seasonal occurrence called the January effect, when investors and money managers load up on stocks after having sold off shares for year-end tax purposes. But analysts warned that the market might not be able to sustain the upturn without concrete evidence that the economy is improving.

"It looks like it is getting harder to get buyers to step up at these levels," Johnson said.

The Dow's loss today left the blue chips with a gain of 72 points, or 0.7 percent, for the year. But the Dow is up nearly 23 percent from its Sept. 21 low.

The tech sector has been even stronger with the Nasdaq advancing nearly 5 percent so far this year and jumping almost 44 percent from its post-attack low.

Likewide, technology fared the best today, benefitting from bullish comments made yesterday by executives from Oracle and Cisco.