- The Washington Times - Tuesday, May 21, 2002

NEW YORK (AP) Disappointed by a report on the economy and uneasy after warnings of more terror attacks, investors cashed in profits on Wall Street yesterday and sent stocks sharply lower.
Stocks were expected to retreat somewhat after last week's big rally, during which the tech-dominated Nasdaq Composite Index had its biggest weekly percentage gain in 13 months. But statements about terrorism by Vice President Richard B. Cheney and the FBI, as well as a disappointing Index of Leading Economic Indicators, prompted additional selling.
"The market was ripe for profit-taking. We had a very good week last week, a very encouraging week. So traders probably jumped on the Cheney thing as a triggering event, another reason to sell. And the economic news, although [the economy] is healthy, it is not as robust as people would hope," said Bill Barker, investment-strategy consultant at RBC Dain Rauscher in Dallas.
The Dow Jones Industrial Average closed down 123.58, or 1.2 percent, at 10,229.50, still managing to hang onto much of its advance from last week when it climbed 413.16, or 4.2 percent.
The market's broader indicators also pulled back. The Nasdaq fell 39.80, or 2.3 percent, to 1,701.59, having on Friday claimed a five-session winning streak, its first since early October. The Nasdaq ended the week up 140.54, or 8.8 percent. It was the Nasdaq's biggest weekly percentage gain since the week that ended April 20, 2001, when it rose 10.3 percent.
The Standard & Poor's 500 index dropped 14.71, or 1.3 percent, to 1,091.88, after rising 51.60, or 4.9 percent, last week. The Russell 2000 index, which tracks smaller-company stocks, fell 5.77, or 1.1 percent, to 503.17.
The selling was intensified by fears of more terror attacks and economic news.
Yesterday, FBI Director Robert S. Mueller III said suicide bombers like those who have attacked stores, restaurants and other public places in Israel will hit the United States. And Mr. Cheney told "Fox News Sunday" that there have been hints of future terrorist attacks that must be taken seriously.
"The average investor is so sensitive right now. You get a little news like that, and all of a sudden, they have a shorter-term outlook on the market," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.
The Leading Economic Indicators reminded investors that the economic recovery remains slow and tentative. The Conference Board said the index, an important barometer of U.S. economic activity, fell 0.4 percent in April, after inching up 0.1 percent in March.


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