- The Washington Times - Tuesday, January 7, 2003

NEW YORK, Jan. 7 (UPI) — Stock prices ended mixed Tuesday as investors locked in some profits after three days of advances, with traders largely having already discounted the proposed $670 billion in economic stimulus contained in the Bush administration plan.

The blue-chip Dow Jones industrial average, which jumped 171.88 points Monday, dropped 32.98 points to close at 8,740.59. The tech-heavy Nasdaq composite index, which gained 34.24 points in the previous session, added 10.25 points to close at 1,431.57.

The broader New York Stock Exchange composite index dropped by 4.82 points to close at 490.89 while the Standard & Poor's 500 index dropped 6.98 points to close at 922.93.

The American Stock Exchange composite index ended down by 10.88 points to close at 828.73 while the Wilshire 5000 Index dropped 58.82 points to close at 8,713.70.

Volume was 1.89 billion on the Big Board and 1.69 billion on the Nasdaq Stock Market.

Analysts said stocks drifted lower as investors locked in some gains after three days of advances sparked by news of the administration stimulus plan.

In an afternoon speech to the Economic Club of Chicago, President George W. Bush proposed a $670 billion economic stimulus package that will include scrapping taxes on stock dividends, an extension of unemployment insurance and faster income tax cuts, the Treasury Department said.

In a statement issued ahead of the speech, the U.S. Treasury said the elimination of dividend taxes will boost the economy this year by $20 billion.

The proposed package, which can only pass with bipartisan congressional approval, will cost $670 billion over the next decade and calls for accelerating the 2001 tax cuts, extending jobless benefits and ending the double taxation of corporate dividends to spur the U.S. recovery, the Treasury Department said.

"The American economy is strong, but it must be stronger," Treasury said in a fact sheet distributed in advance of Bush's unveiling of the plan.

The proposal would make all the tax rate reductions from the 2001 tax law effective this year and retroactive to Jan. 1. That means the tax cuts slated to go into effect in 2004 and 2006 would be moved up to Jan. 1 of this year.

"Upon passage, the president will order the Treasury Department to immediately adjust the amount of money withheld for income taxes, so that Americans will keep more of their paychecks right away," Treasury said.

The plan will reduce the marriage penalty this year, instead of waiting until 2009, which the administration estimates will benefit 46 million married couples. The plan will raise the child tax credit from $600 to $1,000 per child this year, instead of in 2010.

Meanwhile, on the economic front, chain stores closed out a disappointing holiday season with solid if unspectacular sales, two reports showed.

The Bank of Tokyo-Mitsubishi and UBS Warburg said in a joint weekly sales report chain store sales rose 3.3 percent year-over-year in the week ended Jan. 4, after recording a 2.9 percent gain in the previous week.

Separately, Instinet Research said in its weekly Redbook report that sales at major chain stores rose 0.5 percent in the five weeks ended Jan. 4, compared with the previous month. December was a five-week month in the retail calendar, while November was a four-week period.

The BTM/UBSW weekly sales index, which is compiled from a group of major discount, department and chain stores across the country, fell 0.2 percent from the prior week, which included the busy shopping days just before and after Christmas. Sales in that week were up 2.1 percent from the week before.

In other economic news, the Commerce Department said orders for manufactured goods posted their third decline in past four months during November, falling 0.8 percent to $319.3 billion after rising 1.4 percent in October. Economists were expecting new orders placed with U.S. factories to decline by 0.5 percent during the month.

Meanwhile, U.S. Treasury prices pushed higher. The 10-year bond rose 9/32 to 99 27/32. Its yield, which moves in the opposite direction of its price, eased to 4.02 percent from 4.05 percent late Monday.

In Europe, stock prices ended lower in light trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index lost 65.8 points, or 1.6 percent, to 3,935.6. The German DAX index fell 73.10 points, or 2.3 percent, to 3,084.15 and the French CAC-40 index lost 53.91 points, or 1.7 percent, to 3,156.36.

Analysts said stocks came under pressure from continued uncertainty about the impact of an expected war against Iraq, weakness in oil stocks and some profit-taking.

Banking and financial stocks also remained under pressure as well as pharmaceutical issues, although interest in selective retailers and telecom issues helped trim the losses.

In Asia, prices eased on the Tokyo Stock Exchange, pressured by global tensions and concerns over Japan's financial system. The blue-chip Nikkei Stock Average, which rose 134.38 points Monday, slipped 56.83 points, or 0.65 percent, to 8,656.50.

Analysts said stocks retreated from their best levels amid concerns over global tensions and Japan's wobbly financial system despite strength in high-tech issues.

Worries over growth in Japan's economy, pressured banks, retailers, property developers and other domestic-oriented issues.

Bank stocks were also weighed down by jitters over inspections by the Financial Services Agency expected later this month. The inspections are part of the government's plan to implement a stricter method of assessing bank loans.

Elsewhere in Asia, prices on the Hong Kong Stock Exchange ended slightly lower, as worries of a U.S.-led war on Iraq prompted investors to take profits. The blue-chip Hang Seng Index, which rose 82.11 points during the previous session, eased 13.56 points, or 0.1 percent, to 9,652.40.

Stocks also ended lower on the South Korean Stock Exchange as sentiment was hurt by lingering worries over North Korea's nuclear threat. The Korea Composite Stock Price Index, or Kospi, which rose 5.61 points during the previous session, lost 14.51 points, or 2.2 percent, to 652.20.

Prices ended slightly higher on the Taiwan Stock Exchange. The key Weighted Index, which rose 63.54 points during the previous session, added 11.22 points, or 0.2 percent, to 4,701.08.

Semiconductor-related shares led the market higher after Deutsche Securities raised its investment rating on the semiconductor equipment sector in the U.S. to buy.

Meanwhile, Singapore stocks ended slightly lower. The Straits Times Index, which fell 8.31 points during the previous session, slipped 12.88 points, or 0.9 percent, to 1,318.74.

Elsewhere around the Pacific region, prices ended little changed on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which rose 19.10 points during the previous session, eased 1.60 points to 3,043.20.

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