- The Washington Times - Wednesday, January 9, 2002

NEW YORK (AP) Divergent signals on the state of business left investors cautious and prices mixed on Wall Street yesterday. Upbeat comments from Microsoft and Tiffany encouraged the market, but disappointing statements from Gateway, Ciena and AOL Time Warner limited stocks' ability to advance.
Blue chips were weaker, falling back moderately after weeks of rallying, but tech shares managed modest gains.
As companies begin releasing fourth-quarter sales and earnings and some warn of weaker results, analysts said a pullback is to be expected with investors cashing in profits from recent rallies.
The Dow Jones Industrial Average closed down 46.50, or 0.5 percent, at 10,150.55 after falling 62.69 Monday to quash a three-session, 238-point winning streak.
"We have earnings season upon us and you are seeing some profit-taking, but I don't think it is anything serious. … The Dow hasn't shown any conviction on the downside," said Richard A. Dickson, a technical analyst for Hilliard Lyons in Louisville, Ky.
Despite the Dow's slippage yesterday, the blue chips have gained 129 points in the five session so far in 2002. The Dow has risen 23 percent from its low after the September 11 terror attacks.
The broader market was mixed yesterday. The Nasdaq Composite Index rose 18.63, or 0.9 percent, to 2,055.73, but the Standard & Poor's 500 index fell 4.18, or 0.4 percent, to 1,160.71.
Investors sold off the stocks of companies that reminded them how tough business still is. Gateway slid 25 percent, down $2.56 at $7.69, on a fourth-quarter revenue warning.
Ciena fell $1.05 to $15.70 after Chief Executive Gary Smith was quoted by Dow Jones News Service as saying sales for the company, along with other telecommunications-equipment makers, won't rebound in the first quarter.
"There is no clear sign of recovery," said Mr. Smith, speaking at a Salomon Smith Barney conference in Scottsdale, Ariz.
AOL Time Warner, which reduced its 2002 earnings forecast on Monday, stumbled 68 cents to $32.
While investors' increasing confidence in a healthier economy this year has boosted stocks, analysts say the market's upside will be limited until there are concrete signs of a turnaround.
"Things are definitely looking better. But people are getting very excited, very quickly, and that's when things can pull back," said Gary Kaltbaum, market technician for Investors' Edge Partners.
Still, positive news from several companies triggered some buying.
Gainers included upscale jeweler Tiffany, which climbed $1.95 to $34.84 after saying its fourth-quarter earnings will be at the high end of previous estimates.

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