Dow falls below 10,000
after Greenspan talk

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By Amy Baldwin
Associated Press

NEW YORK >> Investors opted for safety again today, selling stocks and pushing the Dow Jones industrials below 10,000 as they braced for earnings reports expected to begin in earnest next week.

Wall Street got little comfort from an afternoon speech by Federal Reserve Chairman Alan Greenspan, who said acknowledged the economy is stabilizing but still faces significant risks. Among the hurdles, Greenspan said are excessive inventories and slumping demand.

The Dow Jones industrial average closed down 80.33, or 0.8 percent, at 9,987.53, losing 272.21 points for the week. The Dow more than erased its 238-point advance from the previous week when investors bought up stocks on hopes that the economy will soon rebound.

The broader market also recorded losses. The Nasdaq composite index fell 24.78, or 1.2 percent, to 2,022.46 and the Standard & Poor's 500 index declined 10.95, or nearly 1 percent, to 1,145.60.

Decliners narrowly outnumbered advancers nearly 3 to 2 on the New York Stock Exchange, with 1,831 down, 1,309 up and 205 unchanged. Trading volume was 1.19 billion shares vs. 1.29 billion yesterday.

The NYSE composite index fell 4.72 to 582.67, the American Stock Exchange composite index lost 2.76 to 834.07 and the Russell 2000 index, the barometer of smaller company stocks, fell 5.36 to 489.95.

The Treasury's 2-year note rose 1232 to 100 3132; its yield fell 20 basis points to 2.73 percent. The 10-year note gained 78 to 101 132; its yield fell 12 basis points to 4.86 percent. The 30-year note advanced 2332 to 100 18; its yield fell 5 basis points to 5.37 percent.

Still nervous about earnings and the economy, investors have been selling stocks all week. Before making bigger commitments to stocks, they want to see companies return to profitability.

"You have a market that's stuck in no man's land," said Bryan Piskorowski, market commentator for Prudential Securities. "We are looking for earnings to pick up in the second quarter, but have a few months to work through yet. That is why you are seeing this lackluster trading."

Investors also believe there is room for stock prices to come down, considering how far they've risen since the Sept. 11 terror attacks. The Dow is 17.5 percent above its Sept. 21 low of 8,235.81. The Nasdaq is nearly 30 percent above its low; the S&P 500, up almost 19 percent.

"The market is stuck in a 'What now?' mentality. It is in a process of reconciling the vast gains we have seen ... in the context of an economic recovery. We are looking for an economic recovery," Piskorowski said.

Until earnings growth resumes, other investment professionals say investors are considering how to allocate their assets, wary of focusing too much on technology, which took the biggest bite from their portfolios. "The average investor doesn't want to get caught in the trap that many were in the late '90s of, 'Let's go with what's hot,' " said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.

Today's losses were widespread. IBM slipped $1.83 to $120.31, Wal-Mart fell $1.20 to $55.80, and Boeing stumbled $1.15 to $38.69.

Ford fell 13 cents to $15.16 after announcing a restructuring plan that includes cutting 35,000 jobs, closing five plants and eliminating production of four cars models.

Federal Express sank $2.59 to $50.41 after Salomon Smith Barney lowered its rating on the stock to "neutral" from "outperform." Among gainers, Coca-Cola gained 52 cents to $45.30, while 3M advanced 59 cents to $113.79.

Also today, the Labor Department reported wholesale prices fell by 0.7 percent in December. Led by a sharp drop in energy costs, the decline in producer prices -- those before they reach consumers -- helped make 2001 the tamest year for inflation at the producer level since 1986.

One of the few upsides to the slower economy is low inflation. Companies have heavily discounted merchandise and offered free financing and other incentives to lure consumers, whose spending accounts for two-thirds of the economy.

Overseas, Japan's Nikkei stock average finished today down 0.9 percent. In Europe, France's CAC-40 closed up 0.9 percent, Britain's FT-SE 100 advanced nearly 0.2 percent, and Germany's DAX index declined 0.4 percent.