- The Washington Times - Tuesday, March 29, 2005

NEW YORK (AP) — End-of-quarter selling and growing unease about the economy sent stocks sliding yesterday, with Caterpillar Inc. and other industrials depressing blue chips and technology issues dragging the Nasdaq Composite Index to a five-month low.

Analysts blamed the selling on portfolio managers looking to unload poor performing stocks before the end of the quarter tomorrow. Investors also were nervously awaiting two key economic reports due on Friday: the Labor Department’s March employment figures and the Institute for Supply Management’s monthly report on the industrial sector.

Investors discounted the latest reading of the Conference Board’s Consumer Confidence Index, which showed a larger-than-expected drop in confidence for March. The index reading came in at 102.4, less than the 103 forecast from Wall Street and the 104.4 reading in February.

“To some extent, we can expect to be pretty trendless until Friday,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisers. “There’s nervousness. You have people tiptoeing around, and nobody’s really getting into the market in any meaningful way.”

The Dow Jones Industrial Average fell 79.95, or 0.76 percent, to 10,405.70, its lowest close since Jan. 24.

Broader stock indicators also gave ground. The Standard & Poor’s 500 index was down 8.92, or 0.76 percent, at 1,165.36, also the worst showing since Jan. 24. The Nasdaq Composite Index lost 18.64, or 0.94 percent, to 1,973.88, the worst close for the index since Oct. 27.

The Nasdaq’s drop was on par with the other major indexes, with no real standouts leading the losses, but the new five-month low illustrates how far the technology and small-cap-oriented index has fallen out of favor with investors.

Caterpillar Inc. led the decliners on the Dow, tumbling $4.42 to $89.80 after a Morgan Stanley analyst said the stock was fairly valued and urged investors to collect profits.

Industrials and consumer discretionary stocks fell on fears that consumers would be parsimonious this year, though all the major sectors saw losses for the session. The rise in energy prices was also a factor in the selling yesterday, as it has been all month.

“We’ve been in kind of a downward trend overall this year, and there’s nothing real positive that I can see to shake us out of it,” said Brian Bruce, director of global investments at PanAgora Asset Management Inc. “It’s going to take a number of positive things, from both an economic and individual company basis, for the market to get some momentum and enthusiasm going.”

Wall Street watched closely as the latest move in the MCI-Verizon-Qwest merger battle unfolded. MCI Inc. rose 84 cents to $23.78 after it accepted Verizon Communications Inc.’s improved $7.6 billion offer, valued at $23.50 per share, including $8.75 in cash per share.

Verizon’s offer, which was increased by nearly $1 billion, was still lower than Qwest Communications International Inc.’s $25.60-per-share bid, but analysts said Verizon was a better match for the former WorldCom Inc. Verizon gained 14 cents to $34.86, while Qwest added 4 cents to $3.79.

Hewlett-Packard Co. has settled on a new chief executive officer, the Wall Street Journal reported. NCR Corp. CEO Mark Hurd, credited with turning around NCR’s fortunes, is reportedly HP’s choice to replace Carly Fiorina. HP climbed $1.99, or 10.1 percent, to $21.78 on the reports, while NCR tumbled $6.50, or 17.2 percent, to $31.40.

Morgan Stanley slid $1.87 to $53.61 after a management shake-up in response to the company’s lagging stock price.

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