- The Washington Times - Tuesday, September 9, 2003

NEW YORK (AP) — A disappointing revenue outlook from Nokia Corp. set off profit-taking on Wall Street yesterday as investors were reminded that a strong economic rebound isn’t such a sure thing.

“The market took its cue from Nokia,” said John Caldwell, chief equity strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.

“As the market is anticipating with its huge run-up better earnings growth in the third and fourth quarter, we’ll need confirmation from revenues as well. That’s adding a layer of concern in the market today.”

The Dow Jones Industrial Average closed down 79.09, or 0.8 percent, at 9,507.20, having gained nearly 83 points in the previous session.

The broader market also finished lower. The Nasdaq Composite Index fell 15.19, or 0.8 percent, to 1,873.43. The Standard & Poor’s 500 index declined 8.47, or 0.8 percent, to 1,023.17. The Russell 2000 index, which tracks smaller-company stocks, fell 3.56, or 0.7 percent, to 513.57.

Stocks have surged in the past month on brokerage upgrades and economic reports that boosted investor hopes of a strong recovery. But analysts say rising interest rates and weak employment could still threaten the rally; stocks also may be due for pullbacks after advancing so quickly.

“Historically, September has been the worst month for stocks,” Mr. Caldwell said. “That always sits in the back of investors’ minds. There’s always a risk of a self-fulfilling prophecy with selling, and selling begets selling.”

Larry Wachtel, market analyst at Wachovia Securities, said it was a good sign that yesterday’s declines were somewhat modest. Since the rally began in mid-March, the Dow is up 26 percent, the Nasdaq has climbed 47 percent and the S&P; is up 28 percent.

“This is a mild-mannered pullback in a market boiling for six months,” he said. “After six months in a bull market, normally you retract one-third to one-half of the advance. You haven’t come close here. People just don’t want to let go.”

Retailers also took a hit after Goldman Sachs & Co. lowered the stock ratings of Home Depot Inc., Federated Department Stores Inc. and May Department Stores Co., citing weak outlooks. Home Depot dropped $1.60 to $32.15, while Federated lost $1.38 to $42.44 and May declined $1.14 to $25.20.

Alpharma Inc. dropped $4.21, or 18.6 percent, to $18.47 after the specialty pharmaceutical company lowered its third- and fourth-quarter outlook; Morgan Stanley also cut the company’s stock rating to “underweight” from “equal.”

But McDonald’s Corp. rose 24 cents to $23.59 after the fast-food chain said August same-store sales rose 3.8 percent; in the United States, sales rose 8.8 percent, representing the fifth consecutive month of gains since the company announced a turnaround plan.

Research in Motion Ltd. surged $6.31, or 22.3 percent, to $34.55, after the maker of BlackBerry pagers raised its fiscal second-quarter outlook; several brokerages also upgraded the company’s stock rating.

Declining issues outnumbered advancers about 9 to 5 on the New York Stock Exchange. Consolidated volume came to 1.85 billion shares, compared with 1.72 billion traded Monday.

Overseas, Japan’s Nikkei stock average finished 2.2 percent higher yesterday. In Europe, France’s CAC-40 fell 1 percent, Britain’s FTSE 100 declined 0.7 percent and Germany’s DAX index dropped 1.3 percent.

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