- The Washington Times - Wednesday, December 17, 2003

NEW YORK (AP) — Stocks ended mixed yesterday as sluggish earnings from Circuit City Stores Inc. and FedEx Corp. prompted investors to cash in some gains from the previous session’s big rally. A weak dollar also pressured shares.

“It’s been a spectacular year, and from an institutional standpoint, people are locking in profits,” said Janet Engels, director of Private Client research group at RBC Dain Rauscher. “The negative earnings releases certainly weigh on the market, because it has built in fairly high expectations for earnings.”

The Dow Jones Industrial Average closed up 15.70, or 0.2 percent, at 10,145.26, having climbed nearly 107 points in the previous session to its highest close since May 23, 2002.

The broader market finished mixed. The Nasdaq Composite Index fell 2.96, or 0.2 percent, to 1,921.33. The Standard & Poor’s 500 index rose 1.35, or 0.1 percent, to 1,076.48.

Yesterday the dollar hit a new low against the euro amid nagging concerns about the U.S. budget and trade deficits. The euro rose to an all-time high of $1.2422 and then settled at $1.2404 in late New York trading, topping Tuesday’s previous high of $1.2361.

Stocks have pushed higher in recent days as investors grow confident the economy is rebounding with few signs of inflation, which would drive up interest rates. Still, analysts are concerned that share valuations might be getting a bit high.

“There is some healthy caution with the rise in the market and current valuations for stocks,” Miss Engels said. “That does not mean we’re not optimistic for next year, but we don’t necessarily expect a repeat performance of 2003.”

Michael Sheldon, chief market strategist at Spencer Clarke LLC, agreed.

“As we head into the new year, the economic backdrop remains extremely positive,” he said. “Corporate profits are rising, interest rates remain low, and we believe there’s further upside for equity prices.

“The missing ingredient so far has been the lack of jobs,” Mr. Sheldon added.

Circuit City declined 74 cents to $10.34 after the electronics retailer swung to a quarterly profit even as sales fell slightly from a year ago.

Campbell Soup Co. lost 45 cents to $26.55 after Credit Suisse First Boston downgraded the stock to “underperform” from “neutral.”

FedEx dropped $3.30 to $71.01 after the delivery firm reported a 63 percent drop in profits that was worse than Wall Street’s forecasts.

Gainers included Best Buy Co., which rose $1.98 to $51.50 after the retailer posted third-quarter profits that met analysts’ estimates. However it also said earnings for the fourth quarter and fiscal year might fall short of projections because bad weather hurt holiday sales.

Bear Stearns Cos. jumped $2.10 to $76.60 after the Wall Street investment bank reported quarterly income that handily beat Wall Street’s forecasts.

Advancing issues outnumbered decliners about 8 to 5 on the New York Stock Exchange. Volume was moderate at 1.40 billion shares, compared with 1.52 billion traded Tuesday.

The Russell 2000 index, a barometer of smaller company stocks, rose 0.98, or 0.2 percent, to 538.72.

Overseas, Japan’s Nikkei stock average finished 1.7 percent lower. In Europe, Britain’s FTSE 100 increased 0.5 percent, France’s CAC-40 fell 0.2 percent, and Germany’s DAX index declined 0.5 percent.


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