Profit-taking yields
mixed market

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By Amy Baldwin
Associated Press

NEW YORK >> Turning cautious after Wall Street's big two-day rally, investors left stocks mixed today, taking some profits in blue-chip issues and doing some buying in the tech sector. Still, the major stock indicators all scored their second straight weekly advance, an achievement not seen in five months.

"The bottoming process is in hand," said Larry Wachtel, market analyst at Prudential Securities, of the market's two-week gains.

Advancing issues outnumbered decliners 5 to 4 on the New York Stock Exchange where volume was light. The Dow Jones industrial average closed down 40.08, or 0.5 percent, at 8,778.06. The Dow's loss was attributable largely to profit taking following its two-day gain of 335.75.

Broader market indexes finished mixed. The Nasdaq composite index rose 16.00, or 1.2 percent, to 1,361.01, having advanced 75.73 in the previous two sessions. The Standard & Poor's 500 index fell 1.48, or 0.2 percent, to 928.77, following a two-day gain of 46.04. The Russell 2000 index, rose 5.24, or 1.3 percent, to 395.97.

The market's three major gauges claimed their second straight weekly advance, a feat they last accomplished the weeks that ended March 1 and March 8. For the week, the Dow gained 0.4 percent, the Nasdaq surged 4.2 percent and the S&P advanced 2.2 percent.

The price of the Treasury's 10-year note was down 1 point today, while its yield rose to 4.31 percent from 4.18 percent late yesterday. Two-year Treasury notes were down 3/32 point and yielded 2.23 percent, up from 2.20 percent yesterday.

Market observers attributed the two-week gains to signs that the market found a bottom in late July.

"The market is snapping back now, showing more resiliency," Wachtel said. "This is what is known as a proving out of the bottoming phase. You prove it out over time, just as you did in '87 and '74. Months went by before you were sure it was the bottom."

Wachtel said stock prices are finally appearing attractive to investors, and investments such as bonds and money markets are less attractive.

"Stocks relative to everything else look reasonable," Wachtel said. "You have institutional investors saying, 'Too many bonds, not enough stocks,' and individuals saying, "I am not sure abut stocks, but how long can I live on 1 percent (in CDs or money markets)."'

Disappointing economic findings, including weaker-than-expected consumer sentiment, contributed to today's lackluster tone on Wall Street.

The University of Michigan's consumer sentiment index for mid-August stood at 87.9, weaker than the 89.8 reading analysts were anticipating, according to Dow Jones Newswires.

And, the Commerce Department said housing construction in July fell 2.7 percent, the second straight monthly decline and weaker than the 0.5 percent increase some economists were forecasting.

Overseas, Japan's Nikkei stock average finished up 0.1 percent. In Europe, France's CAC-40 finished off 0.03 percent, Britain's FTSE 100 inched up 0.1 percent, and Germany's DAX index rose 0.5 percent.