Closing Market Report

Star-Bulletin news services

Caution costs stocks

NEW YORK >> Wall Street pulled back yesterday as wary investors decided to cash in recent gains despite upbeat news on IBM Corp. and Intel Corp.

Analysts said many investors were again questioning current stock valuation levels after several weeks of advances. A suicide car bombing in Saudi Arabia that killed 17 people over the weekend also weighed on stocks.

"People are being guarded," said Paul McManus, senior vice president and director of research at Independence Investment LLC. "People are looking at the market and wondering, 'Have I missed the rally, can I continue to be aggressive at these levels?"'

The bombing in Saudi Arabia "also was somewhat disconcerting," he said. "People might try to assess how bad it can get or whether it portends anything further."

Declining issues outnumbered advancers about 2 to 1 on the New York Stock Exchange. Consolidated volume was light at 1.58 billion shares, compared with 1.83 billion traded Friday.

The Dow Jones industrial average closed down 53.26, or 0.5 percent, at 9,756.53, having edged up 0.1 percent last week.

The broader market also retreated. The Nasdaq composite index declined 29.10, or 1.5 percent, to 1,941.64, following a weekly advance of 2 percent; analysts said the tech-dominated index took a larger fall because it has had the biggest gains recently. The Standard & Poor's 500 index fell 6.10, or 0.6 percent, to 1,047.11, having gained 0.2 percent. The Russell 2000 index fell 9.75, or 1.8 percent, to 533.21.

The price of the Treasury's 10-year note was down 1/32 point, while its yield held steady at 4.44 percent. Two-year Treasury notes fell 1/32 point and yielded 2.02 percent, unchanged from Friday.

The United States said yesterday it would help Saudis on its war on terror after the bombing of a Riyadh housing complex. Saudis blamed the attack on al-Qaida militants.

International Business Machines Corp. gained $1.69 to $89.95 after Barron's published a cover story saying the company should benefit from a rebound in corporate computer spending.

But Intel fell 48 cents to $33.39 even though J.P. Morgan Securities raised the chip maker's stock rating to "overweight" from "neutral."

Investors have sent stocks higher in recent weeks on optimism for a strong economic recovery. But with the earnings season winding down and stocks near 52-week highs, investors have little motivation to push the market significantly higher, analysts say.

Since hitting a low on March 11, the Dow has gained 30 percent, the Nasdaq is up 53 percent, and the S&P has risen 31 percent.

Tyson Foods Inc. rose 24 cents to $14.47 after the meat and poultry processor reported quarterly earnings that beat Wall Street's estimates.

Decliners included R.R. Donnelley & Sons Co., which fell $1.47 to $26.56, after the commercial printer said it would acquire Canadian printer Moore Wallace Inc. for about $2.8 billion.

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