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Momentum drags
stocks downward
NEW YORK >> Wall Street stumbled lower yesterday as investors wrestled with mixed economic data and news that Pakistani troops had cornered a key al-Qaida leader. Tech shares were dragged down by Microsoft's antitrust problems in Europe.
Stocks tottered in and out of positive territory after Pakistani officials said forces had surrounded Osama bin Laden's top lieutenant, Ayman al-Zawahri, and possibly wounded him in a battle near the Afghan border. But while the news temporarily checked selling momentum after two sessions of gains, it could not fully stanch the market's downward trend.
Investor confidence continues to sag on concerns about the sluggish job market, listless bond yields, inflationary pressures and political uncertainty at home and abroad.
"There are some who believe we've had a classic 10 percent correction and that this is a good buying opportunity, but I tend to think we'll see the market correct a bit more," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "There are so many factors making the downside the path of least resistance ... investors are acting more conservatively and taking defensive positions."
The Dow Jones industrial average closed down 4.52, or 0.04 percent, at 10,295.78, rebounding from steep declines earlier in the day.
The broader gauges also finished lower. The Nasdaq composite index lost 14.32, or 0.7 percent, to 1,962.44. The Standard & Poor's 500 index shed 1.43, or 0.1 percent, at 1,122.32.
The price of the Treasury's 10-year note closed down516 point, while its yield rose to 3.75 percent from 3.70 percent Wednesday. Two-year Treasury notes fell 1/32 point and yielded 1.51 percent, up from 1.50 percent Wednesday.
Word that Pakistani troops had met fierce resistance from fighters entrenched along the South Waziristan frontier bumped all the major indexes up from their session lows, and sent oil and currency prices churning. But Wall Street's muted reaction reflected investors' uncertainty about the market's strength.
"The market's up, the market's down, it's enough to make your head spin. ... I think the one thing that's certain is volatility is coming back," said John Caldwell, chief investment strategist at McDonald Financial Group. "This is still a market that doesn't know what it wants to do."
Investors seemed unimpressed with the Labor Department's report that claims for unemployment benefits fell last week to their lowest level in more than three years, surprising analysts who had forecast a slight increase after two weeks of declines. The news raised hopes that the pace of layoffs had slowed to a point where businesses might begin rehiring workers in larger numbers.
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