- The Washington Times - Tuesday, January 8, 2002

NEW YORK (AP) A better-than-expected forecast from Compaq Computer failed to spur buying on Wall Street yesterday as investors decided to play it cautious and collect some of their profits from last week's rally.
The market drifted lower in quiet selling that analysts said wasn't surprising, given stocks' recent gains. Although investors are becoming more confident that business is improving, they are still concerned about the near future and questioning whether stock prices are rising too quickly.
"This is just a little consolidation after two vigorous days last Thursday and Friday on the market," said Ralph Acampora, director of technical research at Prudential Securities. "This is a pause that refreshes, nothing more."
The Dow Jones Industrial Average closed down 62.69, or 0.6 percent, at 10,197.05, snapping a three-session winning streak that saw the blue chips rise 238 points.
Broader stock indicators also struggled. The Standard & Poor's 500 Index fell 7.62, or 0.7 percent, to 1,164.89, while the Nasdaq Composite Index lost 22.28, or 1.1 percent, to close at 2,037.10.
Compaq rose 29 cents to $11.68 after issuing a statement saying its fourth quarter would be profitable and that results would exceed current estimates. Analysts had predicted a loss for the computer maker, but because investors didn't view Compaq as a high-tech bellwether, the news failed to spark a rally.
"Anything that this particular company says is probably not easily going to be extrapolated toward the rest of the tech sector," said Charles G. Crane, strategist for Victory SBSF Capital Management. "This particular stock doesn't have a halo effect on the rest of the market."
Other tech issues were mixed. Microsoft fell 34 cents to $68.56, while Gateway advanced 43 cents to $10.25.
In the broader market, General Electric fell $1.59 to $39.36, while Boeing climbed 64 cents to $41.
Retailer Circuit City advanced $2.29 to $29.75 after reporting that December sales at its electronics stores open at least a year rose 10 percent and that fourth-quarter results should be better than expected.
The market has been moving solidly higher since the new year, with the most noticeable gains in the technology sector. That advance caps a dramatic rebound during the last three months of 2001 from the precipitous sell-off that followed the September 11 terrorist attacks.
Analysts say the key factors for a recovery appear to be coming together. Economic data is stabilizing and the tone of corporate forecasts is becoming more upbeat.
Still, many on Wall Street are wary. January is historically a good time for the market, and corporate forecasts overall are murky. Investors who were repeatedly burned by rallies that fizzled along with earnings in 2001 are hesitant to make too big a commitment.
"There's a lot of money on the sidelines, and this year it's going into technology," said Matt Brown, head of equity management at Wilmington Trust.

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