- The Washington Times - Thursday, May 16, 2002

NEW YORK (AP) Wall Street's rally stalled yesterday as investors cashed in some of their profits from two days of big gains, but the technology sector still managed to advance for a third straight day, an achievement not seen since early April.
Analysts said the market was tentative after mixed economic news a rise in consumer prices and an increase in industrial production. Investors are wary of sending stocks much higher, particularly after the Dow Jones Industrial Average surged a total of 358 points on Monday and Tuesday.
"The evidence mounts that we are on the recovery side of things, and the economists are bullish. But we aren't going to have a big rally until we get some confirmation of earnings and revenue growth," said Philip Dow, managing director of equity strategy at Dain Rauscher Wessels in Minneapolis.
The Dow closed down 54.46, or 0.5 percent, at 10,243.68.
The broader market was mixed. The Nasdaq Composite Index rose 6.51, or 0.4 percent, to 1,725.56, after a two-day gain of 118.20. The Nasdaq hadn't had three consecutive wins since a four-day rally March 26 through April 1.
The Standard & Poor's 500 Index fell 6.21, or 0.6 percent, to 1,091.07, after rising 42.29 Monday and Tuesday.
Many analysts said the market's recent sell-off climaxed last week when the major indexes closed at levels not seen since early October. In the short run, they expect the indexes to trade within a narrow range.
"I don't think we are quite through with the down days, but I think we are at the end of the decline," said Al Mirman, strategist at V Finance in Sarasota, Fla.
Mr. Mirman added that the market couldn't keep rising at the intense pace of Monday and Tuesday because technical factors short-covering and lower prices were the catalysts rather than a change in fundamentals like earnings growth. In short-covering, investors who had bet that the market was headed lower would be forced to buy stocks when it rallied.
The ability of attractive prices to move the market was limited yesterday after two days of strong buying prompted some profit taking.
Among tech stocks, Applied Materials inched up 11 cents to $26.75 after reporting stronger-than-expected second-quarter profits late Tuesday and offering cautious optimism about the future.
Dell Computer rose 80 cents to $27.70 ahead of its earnings due out today.
But Dow industrial IBM fell 98 cents to $84.50 in advance of its meeting with securities analysts. At the meeting, which began after the market closed yesterday, the company declined to talk about its financial outlook. IBM, which also was expected to discuss structural changes, alluded to potential layoffs. In extended-hours trading, IBM stumbled 5 cents.
Hewlett-Packard, also a Dow stock, fell $1.15 to $19.35 after releasing earnings results late Tuesday for its fiscal second quarter. The company met expectations but refused to make projections about future business, saying more details would be disclosed at an analysts meeting June 4.


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