- The Washington Times - Tuesday, December 4, 2001

NEW YORK (AP) A mix of economic data yesterday left stock investors puzzling over how long the economy will take to recover and prompted many to cash in recent profits.
The selling was minor compared with how strongly stocks have rallied for two months as Wall Street has grown more confident of an economic turnaround in 2002. However, analysts said the gains are still vulnerable amid negative or even varied economic news that indicates the recovery might be pushed deeper into next year.
"Investors are certainly going to be looking at every economic number, because the big question is: When will the economy and earnings recover? That is the whole issue," said Hugh Johnson, chief investment officer at First Albany Corp.
The Dow Jones Industrial Average closed down 87.60, or 0.9 percent, at 9,763.96, preserving some of its 139-point advance from the previous two sessions.
The broader market also fell. The Nasdaq Composite Index slipped 25.68, or 1.3 percent, to 1,904.90 and the Standard & Poor's 500 index declined 9.55, or 0.8 percent, to 1,129.90. The Russell 2000 index, which tracks smaller-company stocks, fell 3.75, or 0.8 percent, to 457.03.
A mix of data yesterday gave investors little clue to the economy's direction and therefore provided an impetus to sell.
The Commerce Department reported that in October, personal incomes, suffering from the layoffs in the wake of the September 11 terror attacks, were flat for the second straight month, the worst showing in more than seven years.
Meanwhile, manufacturing activity declined for the 16th straight month, although at a slowing pace, according to the National Association of Purchasing Management.
The disappointing readings overshadowed two sets of positive news from the Commerce Department.
First, Americans, attracted by free auto-financing deals, pushed their spending up by a record 2.9 percent in October. And construction spending rose 1.9 percent in October, the first monthly gain since April.
Wall Street analysts offered some reassurance, saying the market remains quite strong, with the Dow now up 18.6 percent from its low of 8,235.81, where it closed Sept. 21 after the terror attacks. The Nasdaq is 33.8 percent above its post-attack low; the S&P; 500, up 17 percent.
"It's a mixed bag, but it is a market in transition overall," said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray, adding that he believes the market is in an upward trend.
Automakers, who indicated business remains difficult, were among yesterday's losers.
Ford fell $1.14 to $17.80 amid reports of an upcoming cost-cutting plan and an impending warning of a bigger-than-expected fourth-quarter loss.
By late afternoon, Ford issued a statement saying it is reducing retirement and health benefits for 45,000 white-collar workers and laying off 630 persons. But Ford did not confirm a Detroit News report that it will report a loss of 35 cents a share, wider than the 10 cents analysts expected.
General Motors declined 67 cents to $49.03 after saying November car sales fell about 10 percent, and that it doesn't see an economic recovery until late 2002. On a positive note, GM said truck sales rose more than 36 percent.
Tech losers included software maker Oracle, slipping 33 cents to $13.70 after Merrill Lynch lowered its earnings and revenue estimates for the company. The brokerage cited a challenging environment for software spending.
Losses were otherwise widespread and mostly attributed to profit taking.IBM fell $1.46 to $114.13, General Electric tumbled $1.58 to $36.92 and Citigroup declined 99 cents to $46.91.
Declining issues outnumbered advancers about 3 to 2 on the New York Stock Exchange. Consolidated volume was 1.52 billion shares, compared with Friday's 1.80 billion shares.

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