- The Washington Times - Tuesday, October 29, 2002

NEW YORK (AP) Wall Street pulled back yesterday, its second decline in three sessions, as investors succumbed to profit-taking in the absence of significant earnings news.
The main indexes fluctuated between advances and losses for much of the day as investors gauged whether the market could build on three weeks of strong gains. Traders also were hesitant to commit to stocks while they awaited key economic reports due out later in the week.
"The market is apparently taking a little bit of a breather here," said Charles G. Crane, strategist for Victory SBSF Capital Management. "There were no particularly important economic statistics released today. We got through the bulk of the earnings season.
"So I think investors came into work today thinking what might happen with the elections next week and what has happened with the market the last three weeks," he said.
The Dow Jones Industrial Average fell 75.95, or 0.9 percent, to close at 8,368.04, having gained 1.5 percent last week. Earlier in the day, the blue chips were up as much as 87 points.
The broader market also finished lower. The Nasdaq Composite Index declined 15.30, or 1.2 percent, to 1,315.83, after climbing 3.4 percent last week. The Standard & Poor's 500 index dropped 7.42, or 0.8 percent, to 890.23, after last week's 1.5 percent gain.
The Russell 2000 index, which tracks smaller-company stocks, fell 3.63, or 1 percent, to 369.01.
Analysts say investors are more upbeat about stocks after three weeks of gains on better-than-expected earnings. Since hitting a five-year low on Oct. 9, the Dow has climbed more than 1,000 points.
But analysts say stocks are vulnerable to profit-taking as investors fret about the market's long-term strength. Concerns about a war with Iraq and the economic recovery also may pressure stocks.
Indeed, some analysts expect stocks to drift lower on profit-taking until economic reports on unemployment and manufacturing are released later this week. The numbers will help investors gauge the likelihood of an interest-rate cut when the Federal Reserve meets next week.
"Markets are overbought for the short term and there just aren't enough drivers to power through at this time," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.
Decliners included Kellogg, which fell $2.15 to $33, after the cereal maker beat third-quarter earnings estimates but said it expected to earn between $1.86 and $1.90 per share for 2003. Analysts were expecting $1.90 per share.
The news pressured other consumer-staple companies, including Procter & Gamble, which dropped $2.95 to $85.75, and Pepsico, which declined $1.08 to $43.11.
Gainers included Citigroup, which rose 60 cents to $36.30, after Lehman Brothers raised the bank's stock rating to "overweight," the equivalent of a "buy" rating.
American Express climbed $1.12 to $34.25 after the finance company reported a strong rise in third-quarter profits, beating Wall Street's estimates.
Hewlett-Packard gained 65 cents to $15.27 after Lehman Brothers upgraded the computer maker's stock to "overweight."
Merck jumped $1.32 to $54.23 after announcing the Food and Drug Administration approved the cholesterol treatment Zetia that it is developing with Schering-Plough. Schering rose 78 cents to $21.13.
Declining issues outnumbered advancers nearly 4 to 3 on the New York Stock Exchange.
Overseas, Japan's Nikkei stock average finished yesterday up 0.4 percent. In Europe, France's CAC-40 was up 2.1 percent, Britain's FTSE 100 rose 1 percent and Germany's DAX index jumped 3.1 percent.

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