- The Washington Times - Tuesday, March 2, 2004

NEW YORK (AP) — A spate of profit-taking sent stocks lower yesterday, cutting into the previous session’s gains, and dimming hopes that Wall Street would shake its current malaise. Investors, skittish about a stronger dollar and the specter of an interest rate increase, consolidated their gains from Monday’s strong session.

With very little economic or corporate news to encourage buyers, and with stock prices already considered somewhat overvalued, there was no real impetus to continue the buying from Monday’s session, analysts said, although the market’s foundation remains sound.

“I don’t think what we’re seeing here is an interruption in the overall direction of the market,” said Peter Cardillo, chief strategist at S.W. Bach & Co. “I just think today is just a little bit of profit-taking.”

The Dow Jones Industrial Average was down 86.66, or 0.8 percent, at 10,591.48, nearly erasing the 94.22 points the index gained Monday.

Broader stock indicators also finished lower. The Standard & Poor’s 500 index was down 6.86, or 0.6 percent, at 1,149.10 after an 11-point gain Monday. The Nasdaq Composite Index fell 18.15, or 0.9 percent, to 2,039.65, subtracting from the 28-point rise of the previous day.

Speaking at the Economic Club in New York, Federal Reserve Chairman Alan Green-span said nothing to ease Wall Street’s concerns. He focused his discussion on monetary exchange policy, and said broad intervention into currency markets to support the dollar was unsustainable.

“The markets may have been more sensitive to interest rates and the dollar than we may have thought,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group. “We also have earnings growth past the peak here, oil prices staying stubbornly high, and inflows into equity mutual funds really trailing off. That all contributes to what we’re seeing here.”

Wall Street has been particularly uneasy about the possibility of higher interest rates since the Fed earlier this year seemed to be backing away from assurances that it would keep rates steady.

With many investors waiting for the government’s employment report on Friday, analysts were trying to determine if the market had any momentum to carry it forward after Monday’s rally. That advance was the first real sign of life in a market that has been listless for several weeks.

“The market is going to position itself over the next two days in anticipation of Friday’s granddaddy employment report,” Mr. Cardillo said. “I think we have solid economic expansion, and the market is anticipating continued growth in the labor market.”

The Walt Disney Co. fell 11 cents to $26.76 as dissident shareholders met in Philadelphia to make a case against Chairman and Chief Executive Michael Eisner. Disney’s annual meeting was set for Wednesday.

BJ’s Wholesale Club jumped 70 cents to $25.14. The wholesaler’s fourth-quarter earnings, while beating Wall Street estimates, were flat compared with the similar period a year ago.

FleetBoston Financial Corp. announced in its annual report that its Fleet Specialist subsidiary would pay $59.4 million to settle charges of illegal trading on the floor of the New York Stock Exchange. Fleet gained 14 cents to $45.09, while its merger partner, Bank of America Corp., was up 37 cents at $82.50.

Yahoo Inc. fell $1.08 to $43, a day after the Internet company announced it would charge companies to add more of their Web pages to Yahoo’s search function.

Declining issues outnumbered advancers by a 4-to-3 ratio on the exchange, where volume came to 1.48 billion shares, compared with 1.46 billion at the same point Monday.

The Russell 2000 index of smaller companies dropped 3.71, or 0.6 percent, at 591.06.

Overseas, Japan’s Nikkei stock average gained 0.8 percent. In Europe, Britain’s FTSE 100 closed 0.1 percent higher, France’s CAC-40 climbed 1 percent for the session, and Germany’s DAX index was up 1.1 percent.

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