- The Washington Times - Wednesday, January 23, 2002

NEW YORK (AP) A stronger-than-anticipated economic report yesterday failed to impress investors, who instead retreated into the now-familiar pattern of unloading technology stocks as they worried about the timing of a recovery.
The Nasdaq Composite Index tumbled to its lowest level in two months on concerns that Wall Street’s advance last month might have been too much, too soon.
Although economic data appear to be more positive, many businesses have yet to forecast a turnaround. Occasional bursts of bargain hunting have helped support the market, but there has been no catalyst for a broad rally.
The Dow Jones Industrial Average closed down 58.05, or 0.6 percent, at 9,713.80, falling back from an earlier advance of 70.
The technology-focused Nasdaq fared even worse when its morning gains deteriorated. It lost 47.81, or 2.5 percent, to 1,882.53 its lowest close since Nov. 21, when the index finished at 1,875.05.
The Standard & Poor’s 500 index dropped 8.27, or 0.7 percent, to 1,119.31.
“It’s a little bit disappointing. You had some decent news and the market rose initially, but it wasn’t able to stay up,” said Robert Harrington, head of listed block trading at UBS Warburg. “People are expecting an economic rebound but I don’t think the valuations and fundamentals are there yet. As a result, the market has adopted a ‘Prove it to me’ attitude.”
The sell-off yesterday came despite a report from the Conference Board that its Index of Leading Economic Indicators, a key forecasting gauge, rose a strong 1.2 percent in December, the third consecutive monthly gain and a possible signal that the economy could be nearing a rebound.
“We continue to get signs from external sources, such as unemployment figures and leading indicators, that the economy is going to improve. But what we’re not getting is the companies acknowledging that,” said Bill Barker, investment strategy consultant at RBC Dain Rauscher. “That’s what’s keeping the market off balance.”
Indeed, the market has fluctuated so far this year, after a strong advance during the last quarter of 2001 as stocks rebounded from the post-terror attack sell-off. In recent weeks, cautious forecasts from tech bellwethers, including IBM and Intel, intensified concerns that a recovery might be delayed and that the market might have risen too much, too quickly in its eagerness for a turnaround.
The Dow has fallen 3.1 percent since the beginning of the year, while the Nasdaq has lost 3.5 percent. The S&P is down 2.5 percent.
Earnings news were again the focus of trading yesterday, with Wall Street rewarding strong performances.
Amazon.com rose $2.44 or 24 percent, to $12.60 after reporting its first net profit ever. The figure beat its forecasts and Wall Street’s expectations for the online retailer’s fiscal fourth quarter.
Lucent also advanced, gaining 25 cents to $6.94, on news of a smaller quarterly loss than Wall Street anticipated.
Investors also bid pharmaceutical maker Merck up $1.29 to $59.29 on results that met previously lowered expectations.
In the beleaguered tech sector, semiconductor stocks fell back on worries about weakness in the wireless-communications business. Texas Instruments slipped $1.79 to $25.75, while Intel lost $1.78 to $31.70.
Declining issues led advancers nearly 4 to 3 on the New York Stock Exchange. Volume came to 1.3 billion shares, compared with 1.33 billion shares Friday.

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