- The Washington Times - Friday, March 8, 2002

NEW YORK (AP) Wall Street played it safe yesterday, pausing for mild profit-taking even as more evidence of a recovering economy flowed in.

Analysts said investors, while increasingly optimistic that a turnaround is beginning, are not convinced the market's latest rally, which has included a string of triple-digit gains in the Dow Jones industrials, will last. Wall Street was also concerned that a positive assessment of the economy by Federal Reserve Chairman Alan Greenspan might signal higher interest rates.

The Dow Jones Industrial Average closed down 48.92, or 0.5 percent, at 10,525.37, losing some ground from a 140-point gain Wednesday.

Broader stock indicators also dipped lower. The Standard & Poor's 500 Index slipped 5.23, or 0.5 percent, to 1,157.54. The Nasdaq Composite Index finished down 8.77, also 0.5 percent, at 1,881.63.

"We're seeing some selling, but by and large this is just profit-taking," said Richard A. Dickson, technical analyst at Hilliard Lyons. "There doesn't seem to be any serious underlying problem in the market today. People are just thinking the last couple of days have been pretty good and maybe we should take our profits now, so that if stocks fall back, we won't lose out."

Indeed, after an early uptick, blue chips turned lower as investors collected gains from the sizable advances that had pushed the Dow to its highest level since mid-July.

Financial and manufacturing stocks, which had enjoyed some of the biggest gains in recent sessions, struggled. American Express dropped 41 cents to $39.51, while 3M lost 44 cents to $121.13.

Conseco tumbled 16 cents to $3.59 after Merrill Lynch cut its rating on the insurer to "reduce/sell," a day after Conseco's financial officer stepped down and Moody's Investors Service questioned whether Conseco can generate enough cash to pay its debt.

And Boeing slid $1.38 to $48.48 after South African Airways decided to purchase 41 aircraft from rival Airbus.

But several retailers were higher, lifted by better-than-expected February sales. J.C. Penney advanced $2.08 at $21.27.

Tech stocks were also mixed. Gateway rose 33 cents to $5.63, while competitor Dell dropped 35 cents to $27.59.

Intel rose 2 cents to $32.98 ahead of a midquarter update expected late in the day. After the market closed, the chip maker tightened the range of its first-quarter sales forecast to between $6.6 billion and $6.9 billion, still in line with most analysts' estimates. The company said demand for PC processors remains stable but the communications-chip business is weak. The stock fell 11 cents to $32.87 in after-hours trading.

Wall Street was both encouraged and unnerved by Mr. Greenspan's testimony before the U.S. Senate that a recovery is "already well under way" his most upbeat comments about the economy in a year. Although investors want to hear that conditions are improving, they don't like the prospect of higher interest rates; the Fed lowered rates 11 times in 2001 to stimulate growth, and there is concern that the central bank might view a health economy as reason to start raising them again.

"Greenspan was probably more bullish than people thought he would be. That led people to believe that in the short run at least, he might be more likely to raise interest rates," said John Forelli, portfolio manager for Independence Investment LLC.

"It's our belief, though, that that won't happen before the fourth quarter, and is not something that will happen in the next month or anytime soon."

Investors had little reaction to a Labor Department report showing new unemployment claims fell last week, continuing a steady decline.

Advancing and declining issues traded nearly evenly the New York Stock Exchange. Consolidated volume came to 1.87 billion shares, compared with 1.89 billion reported Wednesday.

The Russell 2000 index rose 0.12 to 494.92.

Overseas, Japan's Nikkei stock average jumped 2.6 percent.

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