Closing Market Report

Star-Bulletin news services

Stocks fall on downbeat
manufacturing report

NEW YORK >> Wall Street posted its second monthly gain despite apathetic trading today, as investors weighed a dismal manufacturing report against Federal Reserve Chairman Alan Greenspan's statement that the economy should rebound. Prices finished modestly lower.

Analysts said many investors chose to cash in profits, particularly after the release of the Chicago purchasing managers report, which showed manufacturing in the Midwest contracted for a second straight month.

"We've had some very strong gains in recent weeks, so it's not so surprising to see a little bit of a pullback," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.

"The manufacturing report didn't help too much, either. We can't move up much until we see more solid fundamentals to support it," he said.

Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange. Volume was moderate.

The Dow Jones industrial average closed down 22.90, or 0.3 percent, at 8,480.09, following a two-day gain of 196.64.

The broader market was mixed. The Nasdaq composite index fell 6.99, or 0.5 percent, to 1,464.31. The Standard & Poor's 500 index dropped 0.92, or 0.1 percent, to 916.92. The Russell 2000 index rose 2.90, or 0.7 percent, to 398.68.

The price of the Treasury's 10-year note was up 21/32 point, while its yield fell to 3.84 percent from 3.94 percent yesterday. Two-year Treasury notes were up 1/4 point and yielded 1.48 percent, down from 1.61 percent yesterday.

With the war winding down in Iraq, investors have become more upbeat about the economic outlook, particularly as a wide range of companies have reported stronger-than-expected earnings in recent weeks. Still, analysts say stocks are vulnerable to bouts of profit-taking.

Indeed, the three main gauges closed a second month of gains today, a feat not seen since last November. In April, the Dow finished up 6.1 percent, the Nasdaq higher 9.2 percent, and the S&P 500 up 8.1 percent.

Greenspan told the House Financial Services Committee today he still believes the economic recovery will accelerate once the uncertainties surrounding Iraq are over. He also left open the possibility of more rate cuts if business investment continues to lag.

Meanwhile, the Chicago purchasing managers index fell to 47.6 in April from 48.1 in March, reflecting a slowing of manufacturing in the Midwest. That stirred some investor worry about the Institute for Supply Management's upcoming report tomorrow on the national manufacturing sector.

Martha Stewart Living Omnimedia dropped $1.11, or 11.3 percent, to $8.68 after the multimedia company posted a first-quarter operating loss that was wider than Wall Street's estimates.

Goodyear Tire & Rubber lost 23 cents to $5.72 after the tire maker reported a first-quarter loss that was wider than expectations.

Overseas, Japan's Nikkei stock average finished 2.9 percent higher. In Europe, France's CAC-40 advanced 0.4 percent, Britain's FTSE 100 dipped 0.1 percent and Germany's DAX index climbed 1.1 percent.

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