- The Washington Times - Thursday, January 9, 2003

NEW YORK (AP) Discouraging earnings news from Alcoa and Gateway jarred Wall Street yesterday, giving blue chip stocks their biggest decline in a month as investors unloaded shares on concerns about the corporate outlook.
Analysts said many investors also were looking to cash in gains after the recent three-day rally, which lifted the Dow Jones Industrial Average nearly 432 points.
"Gateway and Alcoa's earnings were disappointing, so that's leaning on the market," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. "But mostly, you're getting some normal profit-taking."
The Dow fell 145.28, or 1.7 percent, to close at 8,595.31. It was blue chips' biggest decline since Dec. 9, when the Dow fell 172 points.
The broader market also finished lower. The Nasdaq Composite Index dropped 30.50, or 2.1 percent, to 1,401.07. The Standard & Poor's 500 index declined 13.00, or 1.4 percent, to 909.93.
Alcoa slid $2.53, or 10.4 percent, to $21.85 after the aluminum maker reported a fourth-quarter loss wider than analysts' estimates.
Gateway fell 21 cents to $2.96 after the computer maker warned fourth-quarter losses would be larger than expected, citing disappointing holiday sales.
Analysts said yesterday's trading showed that investors remained wary, particularly as they waited for companies to report profits in the coming weeks.
But they said investors still were looking for better prospects for 2003, particularly after President Bush proposed Tuesday to slash taxes by $674 billion over 10 years. The plan includes the elimination of the tax investors pay on stock dividends.
"I think investors' spirits will continue to improve," Mr. Goldman said. "It's not going to be up, up and away. We will have some pauses to refresh. But I think the market will be higher at the end of January than it is right now."
Todd Clark, head of listed equity trading at Wells Fargo Securities, agreed, calling yesterday's declines "a healthy consolidation."
Looking ahead, "the key is going to be Friday's unemployment report," he added. "That's the big number to set the pace for the next trading days and the next month. The market is looking for stability in the labor markets."
General Motors fell $1.63 to $38.21 after the automaker said it likely would lower the expected rate of return on its employee pension fund, a move that would increase its pension expenses and reduce its earnings.
Bank of New York dropped $1.04 to $25.50 after saying it was buying Credit Suisse First Boston's Pershing stock-clearing unit for $2 billion in cash and other considerations.
Telecommunications shares also took a hit. BellSouth fell $1.27 to $27.65 and Verizon dropped $2.32 to $40.91 after UBS Warburg downgraded their shares.
Gainers included Marvel Enterprises, which rose 65 cents to $10.80, after the comic-book publisher raised its 2002 performance target.
Declining issues outnumbered advancers 9-to-5 on the New York Stock Exchange. Volume was moderate at 1.43 billion shares, compared with 1.55 billion traded at the same point Tuesday.
The Russell 2000 index, which tracks smaller-company stocks, fell 4.88, or 1.2 percent, to 389.07.
Overseas, Japan's Nikkei stock average finished 1.6 percent lower yesterday. In Europe, France's CAC-40 fell 2.1 percent, Britain's FTSE 100 dropped 0.8 percent and Germany's DAX index fell 3.9 percent.

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