- The Washington Times - Tuesday, May 13, 2003

NEW YORK (AP) — Weaker-than-expected revenue at Wal-Mart helped incite a round of profit taking on Wall Street yesterday, leaving stocks with moderate declines.

Analysts said the market did not react much to overnight attacks in Saudi Arabia, which killed seven Americans.

While investors are growing more confident about the market, analysts expected some retreat after two straight winning weeks for blue-chip stocks and a four-week winning stretch for the broader market.

“It should be a minor pullback,” said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn., noting the more upbeat tone among investors and on Wall Street.

Mr. Goldman added: “You have had this surge in the market, and this surge is very different than the other rallies [during the three-year bear market]. It is very broad-based. Every stock is participating. … This one has all the earmarks of being a broader-based, sustainable rally, and with that declines tend to be somewhat shallow.”

The Dow Jones Industrial Average closed down 47.48, or 0.5 percent, at 8,679.25, having advanced 235.51 during the previous two sessions.

The market’s broader gauges also gave back some recent gains. The Standard & Poor’s 500 Index fell 2.81, or 0.3 percent, to 942.30. The Nasdaq Composite Index declined 1.72, or 0.1 percent, to 1,539.68.

Despite the declines, investor mood has been much more upbeat than during the three-year bear market, particularly as companies reported surprisingly strong first-quarter profits. Investors had feared another round of downbeat results, owing to the buildup to war in Iraq.

The more positive outlook of investors was clear yesterday as they kept the market’s declines moderate despite disappointing news from Wal-Mart and news of the overnight attacks. Analysts said the market largely shrugged off news about suicide attackers in Saudi Arabia’s capital, Riyadh, setting off several car bombs, which killed at least 20 persons, including seven Americans, and nine bombers.

“The overall tone of the market is very good, despite the negative news and concerns that this market is getting overextended,” said Brian Bush, director of equity research at Stephens Inc. in Little Rock, Ark.

At the end of the session Monday, the Nasdaq had climbed 21.2 percent since March 11, when the market’s major indexes were at their worst levels since hitting multiyear lows in October. The Dow had recouped 16 percent since then, and the S&P; had regained 18 percent.

Still, yesterday, investors punished companies whose results were disappointing. Wal-Mart fell $1.21 to $55.49 after meeting analysts’ first-quarter earnings expectations but missing their revenue estimates.

May Department Stores declined 42 cents to $22.17 after missing Wall Street’s earnings forecast by 2 cents a share.

Earnings-related losers also included energy concern El Paso Corp., which slipped 16 cents to $7.50 on first-quarter profits that missed analysts’ expectations by 5 cents a share.

Brokerage house downgrades pressured other individual stocks. Cisco Systems fell 20 cents to $16.47 after Sanford Bernstein cut the rating on the networker to “underperform” from “market perform.”

Pacific Sunwear dropped 95 cents to $23.39 after Fulcrum lowered the recommendation on the retailer to “sell” from “neutral.”

Declining issues outnumbered advancers about 7-to-6 on the New York Stock Exchange. Volume was light at 1.39 billion shares, but ahead of the 1.37 billion traded Monday.

The Russell 2000 index, the barometer of smaller-company stocks, rose 1.03, or 0.3 percent, to 419.23.

Overseas, Japan’s Nikkei stock average finished yesterday down 0.4 percent. In Europe, France’s CAC-40 inched up 0.03 percent and Britain’s FTSE 100 gained 0.3 percent, while Germany’s DAX index lost 0.9 percent.


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