- The Washington Times - Thursday, November 8, 2001

NEW YORK (AP) Investors played it cautious yesterday, taking some profits from Wall Street's latest rally as they awaited proof that the economy is actually improving.
Stocks closed mostly lower, an expected downturn after Tuesday's rally in response to the Federal Reserve's 10th interest-rate cut this year. But the tech-laden Nasdaq Composite Index eked out a slim gain.
"It is simply a case in which you have had a sprint and you have to walk a little now," said Richard A. Dickson, technical analyst for Hilliard Lyons in Louisville, Ky.
Mr. Dickson was encouraged by signs of the market's newfound health, noting that the Nasdaq had soared 10 percent in the previous five sessions.
The Dow Jones Industrial Average finished down 36.75, or 0.4 percent, at 9,554.37, having climbed 515 points, or 5.7 percent, in the previous four trading days.
During afternoon trading, the Dow returned to the trading levels it held before the September 11 terrorist attack, but the blue chips retreated before the close. The Dow stood at 9,605.51 on Sept. 10, and then lost 1,369 points during the first week of trading after the attacks.
The broader market was mixed with the Nasdaq inching up 2.45, or 0.1 percent, to 1,837.53, and the Standard & Poor's 500 index slipping 3.06, or 0.3 percent, to 1,115.80.
The profit-taking was to be expected, analysts said, and doesn't detract from the fact that investors have been growing more optimistic about an economic turnaround next year.
"There are a lot of believers in the economy's recovery," said Arthur Hogan, chief market analyst at Jefferies & Co.
Investors were somewhat heartened by yesterday's Labor Department report saying third-quarter productivity rose 2.7 percent, the largest amount in more than a year, as businesses slashed workers' hours at the fastest pace in a decade. Analysts expected a 2 percent gain.
Winners included Cisco Systems, rising 46 cents to $18.93 after having surpassed earnings expectations on Monday.
Analysts were encouraged by another advancer, Qualcomm, which rose 38 cents to $55.11 despite missing earnings expectations by 2 cents a share for its fiscal fourth quarter and warning of weaker results ahead. During less-optimistic times, news like Qualcomm's would have caused the stock market, or at least the telecommunications sector, to trade lower,Mr. Hogan noted.
However, many of the stocks that fared the best came from Wall Street's safer sectors, an indication of investors' caution. Consumer-products maker 3M climbed $1.07 to $110.45, banker J.P. Morgan Chase rose $1.05 to $38.59, and drug maker Lilly advanced 55 cents to $80.15.
Although investors have been more hopeful for an economic turnaround in 2002, analysts say they're still wary of making big commitments amid layoffs and worries that consumers will further reduce their spending. Today, the nation's big retailers will release their sales figures for October. The numbers are expected to show consumers remain very nervous and are refraining from spending freely.
Most retailers declined yesterday. Wal-Mart fell $1.12 to $53.82, while Gap stumbled 60 cents to $13.83.
Hewlett-Packard and Compaq suffered after family members of HP co-founder William Hewlett said they will vote their 5 percent stake against the proposed $21 billion acquisition of Compaq, casting doubt on what would be one of the high-tech industry's biggest deals ever. HP declined 63 cents to $19.18, while Compaq fell 51 cents to $7.99.
Advancing issues barely outnumbered decliners 16 to 15 on the New York Stock Exchange. Volume came to 1.41 billion shares, surpassing Tuesday's 1.34 billion shares.
The Russell 2000 index, the barometer of smaller-company stocks, fell 1.98, or 0.5 percent, to 440.80.
Overseas, markets were mixed yesterday. Japan's Nikkei stock average closed down 3.3 percent. Germany's DAX index advanced 3.3 percent, France's CAC-40 rose 0.7 percent and Britain's FT-SE 100 finished unchanged.


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