- The Washington Times - Tuesday, December 11, 2001

NEW YORK (AP) Wall Street faltered yesterday, sending stocks sharply lower as investors locked in their gains from the market's recent rally and waited to see whether the Federal Reserve would lower interest rates again.
The Dow Jones industrials fell back below 10,000 after closing above the milestone last week for the first time since before the terror attacks. Analysts weren't too concerned, though, saying some pullback was inevitable after the market's recent advance.
The Dow closed down 128.01, or 1.3 percent, at 9,921.45, its third consecutive declining session.
Broader stock indicators also slid. The Standard & Poor's 500 index lost 18.38, or 1.6 percent, to 1,139.93. The Nasdaq composite index fell 29.14, or 1.4 percent, to 1,992.12, after finishing above 2,000 last week for the first time since August. The Russell 2000 index fell 7.03 to 474.18.
"You've had a huge run here over last 10 weeks," said Steven Goldman, market strategist at Weeden & Co. "This is just a pause, so the market can rest. But I think we're going to be going back and forth from here for a while. After advancing so much, we can't keep going straight up. "
Indeed, stocks have rallied sharply in recent weeks and some of the recent losses reflect concerns that some of the gains are premature particularly with fourth-quarter-warnings season just beginning. Since Sept. 21, when the indexes made their low for the year, the Dow has risen more than 20 percent, while the Nasdaq has gained 40 percent.
In trading yesterday, Compaq Computer fell $1.62 to $9.70 after a key Hewlett-Packard shareholder Friday announced opposition to the planned merger between the two companies. HP lost 52 cents to $23.
Retailing and financial sectors also suffered on worries that the sluggish economy would continue to hurt business for a while. Home Depot dropped $1.15 to $48.26 while American Express fell 70 cents to $34.
Even news that General Electric expects to achieve double-digit earnings growth next year failed to cheer investors. GE dropped 35 cents at $36.80.
The market's main focus was on today's Fed meeting and what many hope will be the 11th interest-rate reduction of the year.
The cut is widely expected, although there is some debate over how big it will be. There is also some thought that the reduction could be the Fed's last because rates are already at a 40-year low.
In any event, investors were unwilling to make any big moves before the Fed's decision.
"People are waiting to see what the Fed does and what their tone is," said John Forelli, portfolio manager for John Hancock Core Value Fund.
"My guess is that their tone will be that they will continue to cut rates if necessary. To some degree, that's already factored in stock prices, but I think the market will still be pleased."

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