- The Washington Times - Monday, February 2, 2004

NEW YORK (AP) — Investors uncertain about the direction of the economy sent stocks fluctuating throughout an erratic session yesterday, with prices ending mixed. Blue-chip stocks finished higher while tech stocks extended their slide.

The market struggled to interpret the latest reading on manufacturing from the Institute of Supply Management. Although the group’s index of business activity reached a healthy 63.6 in January, up from 63.4 in December, the figure was slightly off analysts’ expectations of 64, and many investors were disappointed.

Such ambivalence perhaps was to be expected in a market that has seen two weeks of declines after having reached its highest levels since 2001.

“Stocks rose between mid-November and mid-January at an annualized rate of almost 80 percent per annum,” said Rod Smyth, chief investment strategist for Wachovia Securities. “This market clearly cannot sustain this kind of growth, no matter how good earnings may be. You’re going to see a lot of churning like this over the next couple of months.”

According to preliminary calculations, the Dow Jones Industrial Average finished up 11.11, or 0.1 percent, at 10,499.18, after losing more than 50 points in the morning and posting more than 80 points of gains in the afternoon.

Broader stock indicators were mixed. The Standard & Poor’s 500 index was up 4.13, or 0.4 percent, at 1,135.26, and the Nasdaq Composite Index finished down 3, or 0.2 percent, at 2,063.15.

Analysts said some of afternoon buying was by investors who realized that earnings reports released in the past two weeks probably were better than they initially thought.

“Overall, we’ve got earnings coming in that are ahead of consensus and great underlying economic fundamentals,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “There’s a lot of retail investors who missed a lot of this run, and so you have a lot of jump-on-the-bandwagon mentality to help you recover.”

Semiconductor stocks fell after the Semiconductor Industry Association reported an 18 percent rise in chip sales in 2003. Intel Corp. fell 20 cents to $30.32, while Advanced Micro Devices Inc. lost 22 cents to $14.64.

Buoyed by a large increase in defense spending in President Bush’s $2.4 trillion budget proposal, defense companies also gained, with Boeing Co. up 79 cents at $42.54 and Raytheon Co. rising 48 cents to $30.99.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume was 1.57 billion shares, compared with 1.64 billion on Friday.

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