- The Washington Times - Monday, March 8, 2004

NEW YORK (AP) — Another lackluster trading session sent stocks lower yesterday despite a wave of corporate deals that underscored the economy’s overall health. Technology issues led the selling as investors moved to less-risky stocks.

Investors appeared focused on the lingering disappointment over the country’s slow job growth, even though a fresh wave of acquisitions showed corporate America was still betting on a growing economy. The government on Friday reported that the nation’s payrolls grew by just 21,000 in February, leaving the unemployment rate stuck at 5.6 percent.

“If nothing else, the jobs figure shows that companies are keeping costs down, and that’ll help earnings,” said Peter Dunay, chief market strategist at Wall Street Access. “At least in the near term, corporate profitability will be a key driver in this market.”

The Dow Jones Industrial Average lost 66.07, or 0.6 percent, to 10,529.48, hitting its lowest level since Feb. 5.

Broader stock indicators also fell. The Standard & Poor’s 500 index dropped 9.66, or 0.8 percent, to 1,147.21, and the Nasdaq Composite Index was down 38.85, or 1.9 percent, at 2,008.78.

Some investors may have felt that technology stocks, which drove the 2003 rally, were overvalued, especially with mixed outlooks on 2004 sales, analysts said. That moved investors to more defensive positions in large-cap, blue-chip stocks.

“What you’re seeing here is a move out of technology, led by semiconductors, and into defensive stocks,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “There’s nothing else pushing the market right now. We’ve run out of gas.”

BellSouth Corp. announced it would sell its stake in 10 Latin American wireless operations to Spain’s Telefonica SA for $4.2 billion in cash and $1.5 billion in assumed debt. The deal will help BellSouth as Cingular Wireless, a joint venture with SBC Communications Inc., prepares its $41 billion acquisition of AT&T; Wireless Services Inc.

BellSouth shed 4 cents to $28.80, AT&T; Wireless was down 12 cents at $13.44 and SBC rose 13 cents to $25.15.

J.M. Smucker Co., which makes Smucker’s jam and Jif peanut butter, fell $2.61 to $49.32 after it announced it would acquire International Multifoods Corp. and its popular Pillsbury products for $500 million in cash and stock. International Multifoods jumped $5.07, or 26 percent, to $24.70.

Eastman Kodak Co. dropped 96 cents to $26.83. The film company said it will buy two product lines from German’s Heidelberger Druckmaschinen AG for up to $150 million.

The board of Martha Stewart Living Omnimedia Inc. met yesterday to plot the company’s course after its founder was convicted Friday of obstruction of justice. Stewart, meanwhile, met with probation officials.

After dropping more than 22 percent late Friday after the verdict was announced, Martha Stewart Living fell 96 cents, or 8.8 percent, to $9.90 yesterday.

Declining issues outnumbered advancers 4 to 3 on the New York Stock Exchange, where consolidated volume came to 1.64 billion shares, compared with 1.81 billion traded Friday.

The Russell 2000 index of smaller companies lost 7.03, or 1.2 percent, to 592.51.

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