Stock market sells off
ahead of holidays

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By Lisa Singhania
Associated Press

NEW YORK >> Investors awaiting more proof that earnings are improving sent stocks sharply lower today and refrained from making any new commitments.

Analysts said Wall Street, still unconvinced that a solid recovery is under way, wanted to see what first-quarter reports, which begin next month, look like. Still, trading volume was low in a trend expected to continue for the rest of the week because of the holidays. The market will be closed Friday for Good Friday, and Passover begins Wednesday.

By early afternoon, the Dow Jones industrial average was down 81.79, or 0.8 percent, at 10,345.88.

Broader stock indicators also slipped. The Standard & Poor's 500 index lost 9.89, or 0.9 percent, at 1,138.81, and the Nasdaq composite index fell 26.93, or 1.5 percent, to 1,824.46.

Declining issues led advancers more than 2 to 1 on the New York Stock Exchange. Volume came to 540.69 million shares, compared with 718.59 million at the same point Friday.

The Russell 2000 index dropped 5.40 to 496.99.

Treasury bond prices were lower at midday.

The price of the Treasury's 10-year note was off 932 point, or $2.81 per $1,000 in face value, while its yield rose to 5.43 percent from 5.39 percent Friday. Prices and yields move in opposite directions.

The 30-year bonds were down 1532 point and yielded 5.84 percent, up from 5.81 percent Friday, according to Moneyline Telerate. Two-year Treasury notes were down 2/32 point and yielded 3.76 percent, up from 3.72 percent Friday.

Yields on one-month Treasury bills were 1.77 percent as the discount held at 1.75 percent. Yields on three-month Treasury bills rose to 1.83 percent as the discount rose 0.01 percentage point to 1.81 percent. Six-month yields rose to 2.11 percent as the discount rose 0.01 percentage point to 2.07 percent.

Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

Meanwhile, analysts said the market is still watching and waiting.

"This is a waiting week. We're waiting for earnings numbers, for commentary from the company's management and guidance as to what the next quarter is going to look like," said Will Braman, chief investment officer, John Hancock Funds.

Cisco Systems advanced 3 cents to $16.60, while Gateway slipped 30 cents to $6.15.

Blue chips were also mixed. Coca-Cola advanced 47 cents to $51.72, while McDonald's fell 47 cents to $27.19, continuing a decline that began Friday on an earnings warning.

After a big rally early this month, stocks have pulled back in recent sessions as investors collected their winnings and tried to figure out what is next. Stock prices have risen sharply in some sectors on expectations that a turnaround is in progress. The problem is that although economic data is strengthening, business profits have yet to indicate the same.

First-quarter earnings season, which begins in April, could give investors a better idea of how business is doing. There are concerns, however, that stock prices have risen too much and that the recovery might not be robust enough to justify the high levels. Investors are also nervous that the Federal Reserve will raise interest rates to prevent the economy from growing too quickly.

Also today, the National Association of Realtors reported that sales of previously owned homes fell slightly in February but still were the second highest monthly level on record. The news wasn't surprising, given low interest rates and the month's warm weather.

Overseas, Japan's Nikkei stock average slipped 0.7 percent. In Europe, Germany's DAX index lost 0.9 percent, Britain's FT-SE 100 dropped 0.9 percent, and France's CAC-40 fell 0.3 percent.