- The Washington Times - Thursday, December 5, 2002

NEW YORK (AP) Profit warnings from Disney and Hewlett-Packard pressured Wall Street yesterday, sending stocks lower in choppy trading as nervous investors weighed a downbeat outlook against hopes for a year-end rally.
The Dow Jones industrials fell 89 points before recovering most of that drop. Analysts said the late-day gains were heartening since many were expecting bigger declines after the Dow's eight-week winning streak.
"We had two or three jolts here that could have resulted in more profit-taking than we had," said Bill Barker, investment strategy consultant at RBC Dain Rauscher. "It's obvious that market sentiment has changed in the last few months, and investors are more positive about their outlook for 2003."
The Dow slipped 5.08, or 0.1 percent, to close at 8,737.85, having fallen 188 points in the previous three days.
The broader market also finished lower. The Nasdaq Composite Index fell 18.61, or 1.3 percent, to 1,430.35. The Standard & Poor's 500 index declined 3.17, or 0.3 percent, to 917.58.
The Russell 2000 index, which tracks smaller company stocks, fell 3.30, or 0.8 percent, to 397.53.
Disney fell 86 cents to $17.68 after the entertainment company lowered its fourth-quarter earnings figure, citing weak ticket sales for its latest animated film, "Treasure Planet."
Hewlett-Packard dropped 86 cents to $18.37 after the computer maker said that revenue in 2003 should rise 2 percent to 4 percent from 2000 levels, lower than its previous forecast.
Analysts say that while investors have been more upbeat about the economy, leading to eight weeks of blue-chip gains, the market is seeing some declines as investors also worry about a war with Iraq and the strength of corporate profits.
"The advance we've seen in stocks over this brief period has probably outpaced the improvement in underlying fundamentals of the companies" issuing outlook warnings, said Charles G. Crane, strategist for Victory SBSF Capital Management.
Still, he added, "the fact that we had a little bit of a pause after eight weeks of superlative performance should come as no great shock to market observers."
Investors largely shrugged off two encouraging economic reports yesterday.
The Labor Department reported that productivity grew at an annual rate of 5.1 percent in the third quarter, faster than the government's previous estimate of 4 percent. Analysts were expecting smaller growth of 4.5 percent.
And the Commerce Department said orders to U.S. factories rose 1.5 percent in October, the first gain in three months, offering hope for the nation's manufacturers, who are trying to shake off a late-summer slump.
Federated Department Stores fell 73 cents to $31.25 after the retailer said November sales at stores open at least a year fell 7.4 percent.
Gainers included Tenet Healthcare, which rose 91 cents to $18.75, after the hospital chain cut its earnings outlook for the next two years, citing concerns about its aggressive pricing strategy.
Declining issues outnumbered advancers 7-to-6 on the New York Stock Exchange. Volume was light at 1.51 billion.
Overseas, Japan's Nikkei stock average finished 2.2 percent lower yesterday. In Europe, France's CAC-40 fell 0.7 percent, while Britain's FTSE 100 dropped 0.7 percent and Germany's DAX rose 1.2 percent.

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