Stocks tumble again
as investors play safe

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By Amy Baldwin
Associated Press

NEW YORK >> Uneasy investors opted for safety again today, taking profits for a second straight day and leaving the stock indexes with only modest gains from Wednesday's huge rally.

The two-day selloff wasn't surprising given the triple-digit surge enjoyed by blue chips and technology stocks on Wednesday. But the drop was disappointing for investors who'd hoped the market would be able to keep more of its big advance, and that the rally signaled a longer-lived upturn.

"It was too much, too soon," Hugh Johnson, chief investment offer for First Albany Corp., said of Wednesday's rally. "There is a message that has been coming for a long time, and that is economists and strategists are too optimistic about the outlook for the economy and earnings. The recovery is not going to come as soon as they expect, or be as strong as they expect. ... The market has gone down to reflect that."

Investors had first believed that earnings would recover in the first quarter and now their hopes for the second quarter are diminishing. Johnson said a third-quarter recovery could also prove to be more premature, optimistic thinking.

The Dow Jones industrial average closed down 97.50 at 9,939.92, After two days of selling, the Dow kept about a third, or 103.37, of its 305.28-point gain from Wednesday.

The broader market also declined for the second straight day, giving up a greater portion of its advance from Wednesday. The Nasdaq composite index fell 49.64 to 1,600.85. The Nasdaq lost all but 27.03 of the 122.47 it surged on Wednesday.

The Standard & Poor's 500 index declined 18.02 to 1,054.99. After two days of selling, the S&P was left with 5.50 points of the 39.36 gained Wednesday.

Decliners outnumbered advancers about 2 to 1 on the New York Stock Exchange, with 2,056 down, 1,090 up and 210 unchanged. Volume came to 1.17 billion shares vs. 1.15 billion shares yesterday.

The NYSE composite index fell 6.99 to 565.73, the American Stock Exchange composite index rose 4.98 to 947.67 and the Russell 2000 index fell 8.66, or 1.7 percent, to 492.73.

The Treasury's 2-year note rose 18 to 100 1332; its yield fell 7 basis points to 3.16 percent. The 10-year note gained 1032 to 98 18; its yield lost 4 basis points to 5.12 percent. The 30-year bond rose 1332 to 96 34; its yield fell 3 basis points to 5.60 percent.

Selling has dominated Wall Street for weeks, with investors unloading shares based on companies' inability to reassure them that business is improving and profits are strengthening. Meanwhile, rallies have been short-lived rebounds because investors see little reason -- other than occasional bargain hunting -- to buy stocks.

Wednesday's rally was an aberration, and investors "kind of went overboard," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.

"What you have to see is continually good economic numbers, which we aren't seeing, and more positive corporate earnings, which we don't have. Until that happens on a consistent basis, people are really hesitant to jump in," Carl said.

Among today's losers, Cisco Systems fell 33 cents to $15.42. The network equipment maker's better-than-expected earnings, released late Tuesday, were the catalyst for Wednesday's rally.

Other tech losers today included Dell Computer, falling $1.36 to $23.88, Texas Instruments, stumbling $1.09 to $28.70 and Intel, declining $1.23 to $27.01.

Investors also pulled out of blue chips, despite the stocks' reputation for safety in bearish markets.

Wal-Mart fell $1.33 to $53.66, Caterpillar retreated $1.05 to $52.81, and Citigroup stumbled $1.03 to $43.30.