Dow rally runs out
of gas but Nasdaq rises

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By Lisa Singhania
Associated Press

NEW YORK >> Wall Street retreated today, sending the Dow Jones industrials falling more than 150 points as investors cashed in their winnings from the market's spectacular two-session rally.

The technology-focused Nasdaq composite index proved steadier, its losses mitigated by optimism about earnings prospects at bellwether Intel. Analysts said the market's overall mood was cautious, but still showing signs of bullishness.

The Dow closed down 153.41, or 1.5 percent, at 10,433.41, giving back less than a third of the 480 points gained during the previous two sessions.

Broader stock indicators were mixed. The Nasdaq advanced 6.98, or 0.4 percent, at 1,866.30, while the Standard & Poor's 500 index fell 7.70, or 0.7 percent, to 1,146.14.

Advancers edged decliners on the New York Stock Exchange, with 1,586 up, 1,550 down and 221 unchanged. Volume came to 1.52 billion shares compared with 1.61 billion yesterday.

The NYSE composite index fell 4.28 to 594.61, the American Stock Exchange composite index rose 1.30 to 877.87 and the Russell 2000 index gained 0.41 to 487.59.

The Treasury's 2-year note slipped 1/32 to 99 2 2/32; its yield rose 3 basis points to 3.16 percent. The 10-year note fell 18 to 98 2932; its yield gained 2 basis points to 5.02 percent. The 30-year bond rose 2/32 to 98 1/4; its yield was unchanged at 5.50 percent.

"This is just normal profit-taking after a fairly strong run in stocks," said Bill Barker, investment consultant at RBC Dain Rauscher. "The mood in the market is substantially better than it was just two weeks ago when there was a lot of gloom around. People are getting their hopes back up again."

Blue chips fell on losses in retailers including Wal-Mart, which fell $2.22 to $60.76. Home Depot slid $2.40 to $47.50, a 4.8-percent loss. The sector had been steadily moving higher on anticipation it would benefit when the economy stabilized.

Consumer goods' companies also fell. Procter & Gamble lost $1.92 to $85.06.

Tech stocks were more mixed. Microsoft dropped 22 cents to $63.08. But Intel advanced 85 cents to $32.70 after Morgan Stanley upgraded the stock to "strong buy" from "outperform," citing the prospect for strong personal computer sales this year.

The tech sector's relatively strong performance might also be attributed to the fact it had notched a smaller advance than blue chips in the recent run-up. As a result, it had fewer gains to lose in profit-taking -- and investors might have decided it was time to invest there.

"The Dow is catching its breath after its big rally and guess what's getting the move back up?" said Ralph Acampora, director of technical research at Prudential Securities. "Technology, because it's lagged behind. This is just catch-up."

Financial stocks were also higher, reflecting expectations that an improving economy will mean higher profits. Citigroup rose 9 cents to $47.70.

And some steel issues got a lift from word that President Bush would place tariffs on several types of imported steel to aid the U.S. industry. Bethlehem Steel gained 7 cents, or 13 percent, to 58 cents after the plan was announced.

Wall Street shrugged off a report from the Institute of Supply Management that showed nonmanufacturing companies had their strongest rate of growth in business activity and new orders in 15 months during February. The data was the latest indication that the economy is emerging from recession, but it wasn't enough to discourage profit-taking because of lingering worries that this rally, like many before it, will ultimately fizzle.

Indeed, companies are expected to begin warnings about first-quarter results early next month. Too many negative outlooks could throw the market off course.

There are also questions about whether some stocks are getting too expensive. Although the tech-focused Nasdaq remains below where it started 2002 and the S&P near its start for the year, the Dow has climbed about 4.1 percent since Dec. 31 -- leading some analysts to suggest that brand-name, blue chip stocks that have led the recent rallies might be overpriced given predictions of a modest, rather than robust, economic recovery this year.

Still, there is a growing consensus that the economic and market outlook is turning around. "This is the best action we've seen in a long time," Acampora said. "I'm very optimistic that this is the beginning of a positive upside mood for the market."