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Nasdaq falls again,
erasing year's gains
NEW YORK >> Fears over a lack of job growth and a sluggish economy sent stocks sharply lower yesterday, with the Nasdaq composite index wiping out all its gains for 2004 and the Dow Jones industrial average nearly following suit.
With the first quarter ending this month, companies such as Nike Inc. and Texas Instruments Inc. have issued surprisingly strong earnings outlooks. But with job creation stagnant and some analysts believing stocks are overpriced, investors feared that the market's year-long rally might have ended.
"When good news doesn't move the market higher, we're obviously in a corrective phase," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. "The glass is half-empty right now, but I do believe that will switch back to half-full again when earnings go out in April."
The Nasdaq lost 13.62, or 0.7 percent, to 1,995.16, after falling 38.85 Monday. The Nasdaq, home to many of the technology stocks that fueled last year's rally, closed below its low for the year of 2,003.37 and posted its lowest close since Dec. 26.
The Dow lost 72.52, or 0.7 percent, to 10,456.96, adding to Monday's loss of 66.07. The Dow was off 280.74 from its 2004 high, set on Feb. 11, and fell below its 2003 closing level of 10,453.92 in afternoon trading before a slight session-ending rally. It was the Dow's lowest close since Jan. 13.
The Standard & Poor's 500 index fell 6.63, or 0.6 percent, to 1,140.58, having fallen 9.66 on Monday.
After peaking three weeks ago, stocks have fallen amid investors' growing discomfort with the economy and a sense that businesses aren't creating enough jobs to give the recovery much momentum going forward. Last Friday's disappointing jobs report from the government only added to Wall Street's frustration.
But many analysts weren't surprised by the market's recent downturn, believing stocks were due for a correction after their runup over the past year.
Hugh Johnson, chief investment officer at First Albany Corp., said investors' moves -- getting out of the once high-flying technology sector and into healthcare and consumer staples -- are similar to those that occurred when the bear market began.
"Normally, in the second year of a bull market things slow down, but this is more than that," Johnson said. "This is not going to turn out to be a barn-burner of a year as was widely expected. I'm in the bullish camp, but I must admit, my bullishness is really being tested."
Texas Instruments said its quarterly profits would come in at the high end of previous forecasts. Shares fell 34 cents to $30.26.
Athletic wear maker Nike jumped $2.17 to $76.66 after stating it would easily beat Wall Street estimates for the current quarter.
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