- The Washington Times - Tuesday, March 26, 2002

NEW YORK (AP) Taking no chances before first-quarter-earnings reports begin, investors collected profits and sent stocks sharply lower yesterday, erasing nearly all the gains the Dow Jones industrials enjoyed during their March rally.
Analysts said Wall Street was concerned that earnings might not be solid enough to justify the rally earlier this month. Low volume, which tends to exaggerate the market's losses or gains, was another factor as traders prepared to celebrate Passover and Easter.
The Dow closed down 146.00, or 1.4 percent, at 10,281.67, its fourth consecutive decline. The average last closed lower Feb. 28, when it hit 10,106.13.
Broader stock indicators also slipped. The Standard & Poor's 500 index lost 16.83, or 1.5 percent, closing at 1,131.87, and the Nasdaq Composite Index fell 38.90, or 2.1 percent, to 1,812.49. The Russell 2000 index dropped 6.00 to 496.39.
Although the start of first-quarter reports is still a week away and relatively few companies have indicated they won't meet expectations, two difficult years on the market have taught many investors to not leave themselves too exposed. As a result, Wall Street is more inclined to sell on uncertainty rather than risk disappointment.
"People want earnings season to start so they can at least get some corroboration that things have turned," said Will Braman, chief investment officer with John Hancock Funds. "When there's this kind of uncertainty… the natural reaction is to curl up in a ball in the fetal position, and that's what the market is doing."
Yesterday's losses appeared most concentrated in the technology sector, which has struggled in recent weeks with doubts it will turn around as quickly as hoped. IBM slipped $2.04 to $103.56, while Intel finished down 59 cents at $30. Both are Dow components.
But the broader market also lagged. McDonald's fell 43 cents to $27.22, continuing a decline that began Friday on an earnings warning. Boeing lost 67 cents to $45.72.
The stock of the holding company for America West fell 26 cents to $5.24 after the airline announced it was reducing some fares, a move viewed as potentially limiting revenue. The selling spread to other airlines, including Delta, which lost $2.15 to $30.99.
Investors also bid Philip Morris down $1.53, or 2.9 percent, to 51.96 after an Oregon jury ordered the company to pay $150 million in damages in a case involving low-tar cigarettes.
Oil-service stocks were one of the few bright spots as the sector rebounded from selling last week. Baker Hughes, which reduced its first-quarter outlook Friday, advanced 49 cents to $37.24.
Despite a big rally early this month, stocks have pulled back in recent sessions, as investors sell rather than risk losing their winnings should the market's momentum fizzle. First-quarter-earnings season could give investors a better idea of how business is doing.
Investors are also nervous that the Federal Reserve will raise interest rates to prevent the economy from growing too quickly.
Declining issues led advancers more than 2 to 1 on the New York Stock Exchange. Volume came to 1.04 billion shares, compared with 1.22 billion Friday.

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