Warnings sink Nasdaq
but Dow gains again

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By Eileen Alt Powell
Associated Press

NEW YORK >> Spooked by weak sales predictions and accounting investigations in the telecommunications and technology sectors, investors collected profits today and left the stock market with a mixed close.

Tech stocks retreated but blue chips scratched out a small gain. Analysts said investors, after pushing tech prices higher last week, were shifting away from the volatile sector until earnings prospects improve or stocks become cheaper.

The Dow Jones industrial average closed up 21.11 at 10,632.35. It was also the Dow's second straight day to close above 10,600 -- a level last reached in July. Broader stock indicators fell. The technology-focused Nasdaq composite index dropped 32.37 to 1,897.12. The Standard & Poor's 500 index fell 2.68 to 1,165.58.

Decliners edged advancers on the New York Stock Exchange, with 1,623 down, 1,519 up and 208 unchanged. Volume came to 1.30 billion shares.

The NYSE composite index rose 0.39 to 604.61, the American Stock Exchange composite index lost 0.76 to 885.92 and the Russell 2000 index fell 1.85 to 498.90.

The Treasury's 2-year note rose 1/32 to 99; its yield fell 2 basis points to 3.52 percent. The 10-year note rose 2/32 to 96 2 2/32; its yield fell 1 basis point to 5.31 percent. The 30-year bond fell 1/32 to 95 18; its yield was unchanged at 5.72 percent.

Although today's selling coincided with disappointing news, many analysts had predicted a pullback. Stocks have been steadily moving higher all month, with the Nasdaq advancing 7 percent last week, leading to speculation that Wall Street was ready for some retrenchment.

"The market has been very strong of late and was due for a pause to refresh, regardless of whether there was good news or bad news," said Alfred E. Goldman, chief market strategist for A.G. Edwards & Sons Inc.

Stock prices also remain a concern. Although Federal Reserve Chairman Alan Green- span said last week that a recovery from the recession "is already well under way," jittery investors still are worried that the recovery will be muted and profits lackluster. They fear that some stocks have risen too much given the uncertainty.

First-quarter earnings season, which begins next month, is expected to provide more indications about the future. But no one knows whether the reports will be strong enough to sustain the market's advance.

In trading today, Wall Street punished stocks it feared wouldn't deliver big returns. Lucent slid 66 cents, or 10.5 percent, to $5.60, while Nokia lost $1.41, or 6 percent, to $22.09, after the telecommunications companies each reduced sales forecasts.

Microsoft tumbled $1.80 to $62.54 on a Goldman Sachs research note saying the bellwether's sales performance for the next fiscal year would be lower than many analysts predicted.

But IBM soared $3.26, or 3.1 percent, to $108.50 after a filing indicated that earnings from its core businesses were stronger than earlier statements indicated. IBM is a Dow component and its gains helped push the index slightly higher. The Dow was also helped by Merck, which rose 75 cents to $63.49 as investors looked for alternatives to technology.

WorldCom and Qwest Communications International dropped significantly on reports that the Securities and Exchange Commission was look- ing into their bookkeeping. WorldCom lost $1.08, or 12 percent, to $7.93, while Qwest shed 51 cents, or 5.4 percent, to $8.95.

In another development, Tricon Global Restaurants agreed to buy Long John Silver's and A&W All American Food Restaurants for $320 million to add seafood and root beer floats to its more-profitable combined-brand stores.

Tricon, the owner of Pizza Hut, KFC and Taco Bell, will pay closely held Yorkshire Global Restaurants $270 million in cash and assume $50 million in debt for the chains, Chief Executive Officer David Novak said. Tricon also plans to change its name to Yum! Brands Inc.

Overseas, Japan's Nikkei closed down 2.62 percent.