- The Washington Times - Wednesday, November 21, 2001

NEW YORK (AP) Wall Street's efforts to start a new bull market stalled yesterday in an expected pullback as investors sold stocks to preserve profits from their latest rally.
Prices fell despite a better-than-expected Leading Economic Indicators report from the Conference Board. Analysts said the good news wasn't enough to offset doubts that the market's advance would last. They also said some selling was inevitable after such a strong performance.
"There's still little evidence of an economic or business recovery, so this rally has so far been mostly based on expectation. And there's only so much you can invest on expectation before you start to worry you'll lose your profits," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
The Dow Jones Industrial Average closed down 75.08, or 0.8 percent, at 9,901.38. For a second day, the Dow remained 20 percent above the 2001 low it set on Sept. 21, a gain that fits the technical definition of a bull market.
Broader stock indicators also fell. The Standard & Poor's 500 Index was down 8.40, or 0.7 percent, at 1,142.66, while the Nasdaq Composite Index was down 53.91, or 2.8 percent, at 1,880.51.
The losses weren't surprising given the market's recent surge. Investors have been buying gradually since the precipitous sell-off that followed the September 11 terrorist attacks. Specifically, Wall Street is feeling more optimistic about a business turnaround and the U.S. military victories in Afghanistan have helped restore investors' confidence.
Although the three major indexes have each made double-digit-percentage advances in the last two months and have returned to their pre-attack levels, most analysts caution against too much exuberance. They note that much of the recent gain is a rebound from a catastrophic loss, rather than buying on healthy earnings.
Still, there are some encouraging signs. The Index of Leading Economic Indicators, released yesterday, rose 0.3 percent in October. Wall Street had been expecting a flat report, but the report suggested the economy might be stabilizing.
That might make the Federal Reserve less inclined to cut interest rates for the 11th time this year at its next meeting and that possibility might have contributed to some of the selling but analysts were still pleased.
"You had better-than-expected retail sales last week, better leading indicators this week, all of which is good news," said Todd Clark, co-head of trading at WR Hambrecht. "That may take the Fed rate cut away, but at this point, I think the psychology is that lower rates aren't what the market wants or needs. They want to see some signs of a firming economy."
Mr. Hyman, the chief investment strategist at Ehrenkrantz King Nussbaum, believes a new bull market could be beginning, but it won't be a stress-free, straight-up advance.
"I do think there's short-term pain to expect. It will be hard to keep up the pace of the market's recent advance, and I expect we'll see a correction and consolidation as part of the process," he said.
In trading yesterday, technology stocks were pulled lower by losses in issues including Intel, which dropped $1.04 to $29.95.
Retailers also suffered, including Target, which fell $1.29 to $36.50 after meeting analysts' estimates but reporting a 14 percent drop in third-quarter earnings.
Both sectors have run up in recent weeks on hopes the worst is over for the market.
Oil-related stocks fared better, reflecting hopes that non-OPEC members will also curtail production and, therefore, further stabilize prices. Exxon Mobil rose 95 cents to $37.96.


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