Closing Market Report

Star-Bulletin news services

Dow loses 130 points

NEW YORK >> Investors cashed in for profits for a second day today, pushing stocks sharply lower on worries that stocks have risen too far, too quickly. The Dow Jones industrials dropped more than 130 points.

Despite the declines, analysts say the mood on Wall Street has been lifting as a majority of companies have reported better-than-expected first-quarter profits. But for that good feeling to last, market observers say, there has to be a longer-term trend of encouraging earnings and economic news.

Wall Street sentiment is improved, said Susan L. Malley, chief investment officer for Malley Associates Capital Management in New York. "But that doesn't make me feel it is going to be easy for the Dow to break out of this trading range, where 8,500 has been the top that it has failed to break through."

She added: "I am hopeful that this is the beginning of the cycle when earnings come in better than expected. If it can continue through the next quarter, then I think we have a good chance of breaking through that range."

Declining issues outnumbered advancers nearly 9 to 5 on the New York Stock Exchange. Volume was light. The Dow closed down 133.69, or 1.6 percent, at 8,306.35. Along with a loss of 75.62 yesterday, the blue chip declines more than wiped out the 186.76 gained on Tuesday and Wednesday.

The broader market also pulled back for a second day. The Nasdaq composite index fell 22.69, or 1.6 percent, to 1,434.54. The Standard & Poor's 500 index declined 12.62, or 1.4 percent, to 898.81. The Russell 2000 index fell 3.77, or 1 percent, to 388.50.

The major gauges ended the week mixed. The Dow forfeited 0.4 percent, but the Nasdaq the S&P each rose 0.6 percent and the Russell gained 1.3 percent.

The declines came amid light trading volume, whereas the gains earlier in the week were made during heavy trading, which analysts believed was a sign of newfound resilience.

"Yesterday and today the pullback is on lighter volume. It always makes me happy to see that. ... I still think we are in an uptrend, but I don't think it will be seamless," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.

The price of the Treasury's 10-year note was up 5/16 point, while its yield fell to 3.88 percent from 3.92 percent yesterday. Two-year Treasury notes were up 1/8 point and yielded 1.56 percent, down from 1.63 percent yesterday.

There were three stronger-than-expected economic reports issued today.

The Commerce Department reported the U.S. economy managed to grow at an annual rate of 1.6 percent in the first quarter, better than the 1.4 percent rate analysts were anticipating.

In a second report, the Commerce Department said that sales of new homes shot up by 7.3 percent in March, far above what analysts had expected, because of continued low mortgage rates and better weather.

Meanwhile, the University of Michigan's index on consumer sentiment for April rose to 86.00 as war fears lessened, according to a report by Dow Jones Newswires. The reading increased from 77.6 for March and was better than the 84.00 level economists had predicted.

Overseas, Japan's Nikkei stock average finished down 2 percent. In Europe, France's CAC-40 lost 1.3 percent, Britain's FTSE 100 declined 0.7 percent and Germany's DAX index fell 1.9 percent.

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