- The Washington Times - Wednesday, May 12, 2004

NEW YORK (AP) — Stocks ended a volatile session mixed yesterday as late-day bargain hunting erased earlier declines, helping the Dow Jones Industrial Average recover from an intraday loss of more than 160 points.

A series of negative factors piled on to discourage buyers — until prices fell so low that some investors decided to place a few bets.

Worries about interest rates, inflation and the situation in Iraq and uncertainty about what effect it might have on the presidential race, as well as the psychological impact of seeing the Dow drop well below 10,000, made for an “ugly” day on the market, said Bill Groenveld, head trader for vFinance Investments.

“Why should the buyers step up here now?” Mr. Groenveld asked. “Why try to catch a falling knife? They have much more room to push down. And I don’t see as many fund managers or institutional investors being proactive in a rising rate environment. … Everybody is in a really reactive stage right now.”

The technology-dominated Nasdaq Composite Index fell 5.76, or 0.3 percent, to 1,925.59, after advancing nearly 2 percent on Tuesday. Still, the index closed well off its lows, having declined more than 2.5 percent earlier in the day.

The other gauges ended fractionally higher, bouncing back from steep declines. The Dow added 25.69, or 0.3 percent, to 10,045.16, coming back from a loss of 167.28. The Standard & Poor’s 500 Index ended up 1.83, or 0.2 percent, at 1,097.28.

Although the major indexes mostly had recovered by the end of the session, low volume suggested that many large investors were staying out of the market. At least some might be awaiting key inflation data — the producer and consumer-price indexes — expected later this week.

Investors once again ignored upbeat news — this time strong earnings from Cisco Systems Inc. and a bright forecast from Qualcomm Inc. This lack of enthusiasm is part of a worrisome pattern that goes back several weeks, even months, said Ken Tower, chief market strategist for Schwab’s CyberTrader.

“Traders and investors aren’t convinced things get better from here, that’s why the market goes down when good news comes out,” Mr. Tower said.

Meanwhile, the U.S. trade deficit swelled to an all-time high of $46 billion in March, reflecting a growing appetite for foreign-made goods. Sales of U.S. goods to other countries also climbed to their highest level on record — an encouraging signal for domestic manufacturers and exporters.

Trade and the migration of U.S. jobs overseas have become major issues for the stock market. Fuel prices also have emerged as a concern, with oil trading at a 13-year high, solidly above $40 a barrel.

It all adds up to a bearish outlook for the months ahead, said Gary Kaltbaum, president of Kaltbaum & Associates, a money-management firm in Orlando, Fla.

“Earnings are good, yes, but the market doesn’t care about that. It’s forecasting what’s going on down the road,” Mr. Kaltbaum said. “The market is anticipating a slowdown on higher rates and rising oil prices … add to that high valuations in the tech space, and I think you have the perfect storm to go lower.”

Cisco Systems closed down 29 cents at $21.96, despite a jump in quarterly profits as governments and businesses ratcheted up capital spending. The world’s largest network equipment maker said it added 200 jobs during the quarter and plans to add 1,000 more positions by the end of the year.

Qualcomm shed 82 cents to $63.90, although it raised its forecast for the quarter and the year on improved orders for its mobile-phone chips.

General Electric Co. finished 15 cents higher at $30.40 after its NBC unit closed its acquisition of Vivendi Universal’s entertainment business.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide