NEW YORK >> Still skeptical about the stock market's long-term potential, investors cashed in some gains from two weeks of rallies today, sending prices lower. Disappointing earnings from Kimberly-Clark, Wyeth and Texas Instruments also prompted some selling. Stocks fall on
profit-taking
By Amy Baldwin
Associated PressAnalysts had expected the market to give back some of its stunning advance, which over the past eight sessions boosted the Dow Jones industrials more than 1,200 points.
After falling as much as 162 points, the Dow closed down 88.08, or 1 percent, at 8,450.16. Declining issues outnumbered advancers nearly 5 to 2 on the New York Stock Exchange. Trading volume was light.
The broader market also retreated. The Nasdaq composite index fell 16.87, or 1.3 percent, to 1,292.80. The Standard & Poor's 500 index declined 9.56, or 1.1 percent, to 890.16. The Russell 2000 index, the barometer of smaller company stocks, fell 5.97, or 1.6 percent, to 362.66.
The price of the Treasury's 10-year note was down 3/32 point today, while its yield rose to 4.26 percent from 4.24 percent late yesterday. The price of two-year Treasury notes was unchanged, but their yield fell to 2.20 percent from 2.21 percent yesterday.
Today's selling was largely due to investors taking profits from more than two weeks of gains during an earnings season that analysts say has for the most part surpassed their expectations. Since Oct. 9, the Dow has risen 17.2 percent. The Nasdaq has jumped 17.6 percent and the S&P 500 has soared 15.8 percent.
"Given the strength of the rally, it was appropriate to expect a pause. The fact that you are getting less compelling earnings news today from market leaders like Texas Instruments and Kimberly-Clark also gives rise to a pause," said Jack Caffrey, equities strategist J.P. Morgan Private Bank.
Some analysts and investors are wary of the latest rally, worried they will be faked out by what might be another bear market rally, such as the one-week surge in late July when the Dow jumped more than 1,000 points.
"It's a bit hard to get excited in the short term," Caffrey said.
But others are optimistic and say this time could mark a real upward trend, largely because earnings news has been stronger than expected.
"This has the opportunity and a higher probability to have lasting power unlike the whiplash we suffered in late July, early August," said David Sowerby, chief market analyst, Loomis, Sayles & Co. "In terms of longevity, it is closer to three weeks (old), not one week, and it is supported by better earnings. ... And, there is an absence of another accounting fiasco and that is superseding the uncertainty of war and terrorism."
Kimberly-Clark sank $6.18 to $50.50 after the consumer products maker missed third-quarter earnings expectations by 4 cents a share and said its 2002 results will come in below analysts' estimates.
Drug maker Wyeth stumbled $1.30 to $34.35 on earnings that missed analysts' expectations by 5 cents a share.
Chip maker Texas Instruments dropped $3.12 to $14, after reporting earnings late Monday that were a penny shy of expectations and warning about fourth-quarter results.
United Parcel Service fell $1.92 to $62.26 on profits that were 3 cents short of analysts' expectations.
But RadioShack rose 80 cents to $21.93 after surpassing earnings forecasts by a penny a share.
And, Northwest Airlines advanced 41 cents to $7.46 after Deutsche Securities upgraded its shares to "buy" from "hold."
Overseas, Japan's Nikkei stock average finished down 3.2 percent. In Europe, France's CAC-40 fell 1.1 percent, Britain's FTSE 100 declined 0.4 percent, and Germany's DAX index dropped 3.9 percent.
