- The Washington Times - Wednesday, December 12, 2001

NEW YORK (AP) The stock market struggled to find a direction yesterday despite the Federal Reserve's 11th interest-rate cut of the year and a bullish forecast from Nokia.
Tech stocks managed a small gain, but the broader market fell back when a disappointing outlook from Merck late in the session reminded investors that the timing of an economic turnaround is still uncertain. Analysts said the Fed's decision to lower rates, while welcome, was widely expected and failed to inspire sustained buying.
The Dow Jones Industrial Average closed down 33.08 or 0.3 percent, at 9,888.37. It was the fourth straight decline for the index, which had risen as much as 93 points on news of the Fed cut.
Broader stock indicators were mixed. The Standard & Poor's 500 Index lost 3.17, or 0.3 percent, to 1,136.76. The technology-focused Nasdaq Composite Index rose 9.81, or 0.5 percent, to 2,001.93.
In its statement announcing the rate cut, the Federal Reserve indicated it saw some signs of "preliminary and tentative" stabilization, but said it remained focused on the risk of more economic problems. Although rates are a 40-year low, the statement's tone suggested that more reductions are possible.
"The markets got the rate cut they wanted and the Fed said they were starting to see some evidence the economy was firming up," said Todd Clark, co-head of trading at WR Hambrecht. "That was enough for people to get encouraged."
But Wall Street's good feeling and the solid gains immediately following the rate cut dissipated with Merck's forecast of no growth in earnings per share next year. The stock closed down $6.29, at $60.70.
"When you have a drug company come out and say that there's zero-growth, that's fairly dramatic," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
Manufacturing and industrial stocks were mixed. General Motors fell $1.69 to $48.65, while Caterpillar rose 49 cents to $50.50.
Tech stocks fared a little better because of an upbeat forecast from Nokia. The world's biggest cell phone maker rose $1.71 to $25.50. after saying it expects sales to rise 20 percent during the fourth quarter.

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