- The Washington Times - Tuesday, January 1, 2002

NEW YORK (AP) Wall Street ended one of its most dreadful years on a down note as investors sent stocks sharply lower yesterday to minimize their tax bills.

The sell-off seemed an appropriate finish to 2001 for the market, which saw its major indexes lose ground for a second straight year their worst performance in nearly three decades.

But despite the year-end decline, analysts said investors, holding on to the optimism that marked trading in recent weeks, were already focusing on next year.

“2001 was a year to forget and 2002 is a year to look forward to,” said Alan Ackerman, market strategist with Fahnestock & Co.

The Dow Jones Industrial Average closed down 115.42, or 1.1 percent, at 10,021.57, according to preliminary calculations.

Broader stock indicators also fell. The Standard & Poor’s 500 index lost 12.94, or 1.1 percent, to 1,148.08, while the Nasdaq Composite Index fell 36.84, or 1.9 percent, to 1,950.42.

For the year, the Dow dropped 7 percent, the Nasdaq lost 21 percent and the S&P fell 13 percent. The last time all three indexes fell for two consecutive years was in 1973 and 1974. (The Dow also dropped in 1977 and 1978, but the other indexes did not have a two-year losing streak.)

Trading volume was light throughout the session as many investors took the day off in advance of the new year’s holiday. Fewer buyers and sellers made stocks more susceptible to sharp spikes or declines.

Yesterday was also the last day to sell stocks for any write-offs on 2001 tax bills, so analysts were not surprised at the market’s tone.

Much of the selling was focused in the technology sector. Gateway slipped 30 cents to $8.04, while Microsoft fell $1.62 to $66.25. Nine states yesterday opposed a Microsoft request for more time to produce evidence in the antitrust case against the company.

Retailers also suffered. The Gap fell 7 cents to $13.94, while Wal-Mart dropped 80 cents to $57.55.

America West rose $1.03 to $3.50 after the troubled airline won approval Friday for $380 million in lending guarantees under a $10 billion government package. Congress passed the package in response to the September 11 terrorists attacks.

Analysts said yesterday’s session was typical of end-of-the-year trading, but did not indicate what is to come in 2002. Instead, they said, the market appears poised for a relatively strong start to the new year.

In the last three months, the market has fully rebounded from the precipitous decline that followed the September terrorist attacks. The Dow has climbed nearly 22 percent, the Nasdaq is up more than 37 percent and the S&P has advanced almost 19 percent.

Stocks have since hovered in a narrow trading range about 10,000 on the Dow, near 2,000 for the Nasdaq but most market watchers agree that more gradual progress forward is likely. Economic data are improving and corporate forecasts appear to at least be stabilizing.

Also yesterday, the market shrugged off news that Argentina’s third president in two weeks had resigned. The country’s serious economic problems prompted the first resignation barely a week ago; since then, two other men have accepted and then stepped down from the post. Advancing and declining issues traded nearly evenly on the New York Stock Exchange. Volume came to a relatively light 943.69 million shares, compared with 900.63 million Friday.

The Russell 2000 index dropped 5.12 to 488.50.

Overseas, most markets were closed for the holiday, including the Tokyo, Frankfurt and Paris exchanges.

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