Stocks take breather
following 2-day rally

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By Amy Baldwin
Associated Press

NEW YORK >> Investors collected profits on Wall Street today, ever aware of the uncer- tain economy and taking no chances after two days of sizable gains.

The market's slippage wasn't surprising as buyers had been lured to stocks by bargain prices, not a renewed faith in an economic turnaround.

The Dow Jones industrial average closed down 21.04 at 9,863.74. The Dow climbed 259.34 in the previous two sessions. The Nasdaq composite index fell 12.45 to 1,834.21 and the Standard & Poor's 500 index declined 4.44 to 1,107.50.

Decliners edged advancers 15 to 14 on the New York Stock Exchange, with 1,584 down, 1,501 up and 257 unchanged. Volume was 1.09 billion shares.

The NYSE composite index fell 1.20 to 571.48, the American Stock Exchange composite index fell 2.10 to 838.63 and the Russell 2000 index inched up 0.69 to 472.01.

The Treasury's 2-year note fell 18 to 100; its yield rose 7 basis points to 3.00 percent. The 10-year note fell 1/2 to 99 1/4; its yield gained 7 basis points to 4.97 percent. The 30-year bond lost 2332 to 982732; its yield rose 5 basis points to 5.45 percent.

Today's trading fit into Wall Street's pattern so far this year. Caution has dominated stock trading as companies reported lackluster earnings and offered few positive predictions about the future. The major indexes are in negative territory for 2002, led by the Nasdaq, down 5.9 percent. The S&P has fallen 3.5 percent; the Dow, off 1.6 percent.

The December collapse of Enron, brought on by irregular accounting practices, has made investors more careful. "Essentially, what we are left with is: What do the earnings numbers look like? And, can we trust the numbers?" said Alan Ackerman, executive vice president of Fahnestock & Co. "And, the jury is still out on whether the economy has hit bottom. It's enough to make one duck the market."

A congressional appearance today by former Enron Chairman Kenneth Lay, who declined to answer questions before the Senate Commerce Committee, increased investors' uneasiness. The Enron debacle has raised questions about the truthfulness of other companies' books.

"People are worried about what other accounting bombs might be out there," said Richard A. Dickson, technical analyst for Hilliard Lyons in Louisville, Ky. "It doesn't help to hear all this congressional testimony going on, all these Enron guys taking the Fifth (Amendment protection). It sets a sour mood."

Investors sold Nortel, down 42 cents at $6.42, after Chief Financial Officer Terry Hungle abruptly resigned yesterday because of investments he made in the company's 401(k) retirement plan. Following Enron, investors have been more skeptical of how corporate executives profit from trading their companies' stock.

Most of the market's losses centered on the tech sector. Microsoft fell 99 cents to $60.14, and Intel stumbled 60 cents to $32.97.

There were some gainers, typically in safer, blue chip sectors. Procter & Gamble climbed $1.84 to $83.55, while Merck rose 77 cents to $60.22.

After the market closed, Applied Materials, the biggest maker of semiconductor-manufacturing tools, reported a fiscal first-quarter loss as it cut jobs and demand for its equipment slumped. The loss in the period ended Jan. 27 was $45.5 million, or 6 cents a share, compared with net income of $156.8 million, or 19 cents, a year earlier. Sales fell 58 percent to $1 billion from $2.36 billion.

Applied recorded $55 million in costs from firing workers and $6 million in acquisition expenses. Excluding those costs, the company said it would have earned $15 million, or 2 cents a share. On that basis, analysts expected Applied to break even. The shares of Applied fell 97 cents to $44.71 in regular trading today.

Overseas, markets were mixed today with Japan's Nikkei stock average finishing up nearly 2.0 percent. But in Europe, France's CAC-40 and Britain's FT-SE 100 each ended down 0.3 percent, while Germany's DAX index fell 1.1 percent.