Stocks rise after GDP
shows 1.4% growth rate

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By Amy Baldwin
Associated Press

NEW YORK >> A brief surge of enthusiasm evaporated on Wall Street today, gradually pulling stock prices lower in what turned out to be another lackluster session. Blue chips fell into losing ground in the last half hour of trading, while technology issues stumbled earlier on a profit warning from Gateway.

Stocks initially had a healthy, widespread advance on news that the economy grew by a stronger-than-expected rate in the fourth quarter. An uptick in business activity in the Chicago area also prompted strong buying.

But the market repeated a now-familiar pattern of retrenching whenever it climbed to a point where investors believed it would be prudent to cash in their profits.

So the Dow Jones industrial average closed down 21.45, or 0.2 percent, at 10,106.13, having risen as much as 111 in the first hour. The Dow's moves mirrored those of Wednesday, when it surged nearly 140 points on positive comments from Federal Reserve Chairman Alan Greenspan, but then closed up a slim 12.32.

The Standard & Poor's 500 index declined 3.16 to 1,106.73, while the Nasdaq composite index fell 20.36 to 1,731.52.

For the month, the Dow rose 1.9 percent, its fourth monthly gain in five, and is up 0.84 percent since Jan. 2. The S&P 500 fell 2.1 percent for the month while the Nasdaq lost 10 percent.

In the past two decades, the S&P 500, according to Bloom- berg News, has only declined in each of the first two months three times. In two of those years -- 1982 and 1984 -- the index has ended higher. In the third instance in 2000, the index fell 10 percent.

Advancers edged decliners on the New York Stock Exchange, with 1,625 up, 1,492 down and 234 unchanged. Volume was 1.35 billion shares.

The NYSE composite index slipped 0.60 to 578.60, the American Stock Exchange composite index rose 0.94 to 865.58 and the Russell 2000 index fell 3.24 to 469.37.

The Treasury's 2-year note fell 18 to 100; its yield rose 8 basis points to 2.99 percent. The 10-year note lost 12/32 to 99 31/32; its yield gained 5 basis points to 4.88 percent. The 30-year bond fell 2732 to 99 732; its yield rose 6 basis points to 5.43 percent.

For much of today, there was modest buying activity pegged largely to a Commerce Department report on the gross domestic product. GDP rose at an annual rate of 1.4 percent in the final three months of 2001, surpassing analysts' expectations for a 0.9 percent increase. The revised number was considerably stronger than the 0.2 percent growth rate estimated in last month's report.

The Purchasing Management Association of Chicago also had positive news, saying its index of area business rose to 53.1 percent in February on a seasonally adjusted basis from 45.1 in January. A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 signals a contraction.

The Chicago survey is considered a reliable forecast of the index of the Institute for Supply Management, formally the National Association of Purchasing Management, which is due to be released tomorrow.

But Wall Street's response, from enthusiastic to uninspired, was similar to Wednesday when stocks advanced strongly after Greenspan told Congress the recession is nearly over, although the economic recovery won't be particularly robust. Stocks later lost most of those gains. Analysts attributed the market's inability to hold its gains to the fact that the pace of the economic recovery will likely be slow.

"I think Mr. Greenspan underscored the whole thing. He talked about moderation. The economy is coming out of the recession, but it is not vigorous," said Larry Wachtel, market analyst at Prudential Securities.

Prospects of a robust turnaround would likely prompt investors to buy up riskier tech shares, Wachtel said. Instead, tech continues to slump as companies put off orders for new computer and networking equipment.

"Capital spending is certainly not vigorous, which is why the Nasdaq is down. I see no signs that companies are spending on telecommunications, software or technology," Wachtel said.

The tech sector fell after a first-quarter profit warning from Gateway. Gateway fell 50 cents to $4.60. Other tech losses came from Dow industrial Intel, down $1.31 at $28.58, and Dell Computer, off 58 cents at $24.69.

The Dow's earlier advance was crushed by Disney, which fell $1.25 to $23, and 3M, which stumbled $1.07 to $117.93.