Stocks Mixed on Profit-Taking
%mlink(STRY:; PHOTO:XNYR304-073002; AUDIO:197%)
NEW YORK (AP) _ An expected bout of profit-taking and a larger-than-expected decline in consumer confidence sent stocks lower Tuesday, but the market still managed to hang on to most of its huge rally.
Analysts said that although investors are still wary that stocks will fall back again, they were reassured by news that President Bush had signed into law legislation that toughens penalties for corporate fraud.
``This pullback that we’re getting is great. This is not panic, just a healthy rest,″ said Ralph Acampora, director of technical research at Prudential Securities. ``At least on a short-term basis we’re starting to feel better.″
By late afternoon, the Dow Jones industrial average was down 69.78, or 0.8 percent, at 8,642.10, after alternating between gains and losses for much of the day. In the previous four sessions, the Dow regained 1,009 of the 2,650.74 points lost in more than two months of selling.
Broader stock indicators were slightly higher. The Standard & Poor’s 500 index was down 1.39, or 0.2 percent, at 897.57, and the Nasdaq composite index fell 1.05, or 0.1 percent, to 1,334.20.
Stocks fluctuated throughout the session as investors alternated between optimism and pessimism about the prospects for more gains.
A weaker-than-expected reading in the Conference Board’s consumer confidence index contributed to the selling. The index fell to 97.1 in July from a revised 106.3 in June _ its lowest level in five months and well below the 101.5 analysts forecast. The Conference Board said the decline reflected worries about the struggling stock and job markets.
The figure is closely watched since consumer spending, which accounts for two-thirds of the economy, is viewed as crucial if a recovery is to continue.
Wall Street was cheered, however, by the bill signed into law by President Bush. The legislation, prompted by a string of accounting and ethics scandals at companies including Enron and WorldCom, strengthens penalties for corporate wrongdoing. It also requires top executives to vouch personally for the accuracy of their companies’ reports.
Still, there were doubts the market would be able to sustain its advance, and stocks succumbed to selling as investors locked in gains.
Analysts also hesitated to say a turnaround had begun. They noted that numerous rallies have fizzled during the past two years, and that could still happen to this one.
``The market is taking a pause today,″ said Tom Galvin, chief investment officer at Credit Suisse First Boston. ``We’re still at a very early stage of trying to define and solidify a market bottom, and it’s too early to say we’re recovering.″
Merrill Lynch fell 29 cents to $35.96 after the brokerage firm denied it knowingly helped Enron distort its financial problems. In a statement submitted to a Senate subcommittee investigating the matter, the company defended its actions as appropriate.
Financial stocks also were higher. Citigroup lost 22 cents to $33.09, while J.P. Morgan Chase slipped 47 cents to $24.63.
Among tech stocks, Intel lost 15 cents to $18.74 and Ciena was off 2 cents to $4.23.
AOL Time Warner rose 47 cents to $12.05 and AT&T gained 29 cents to $10.03 on word the two companies had put on hold plans for a stock offering of Time Warner Entertainment, a jointly held company that controls HBO, Warner Bros. and Time Warner Cable.
Retailers struggled to keep up. Sears, Roebuck fell $1.75 to $48, while the Gap dropped 58 cents to $12.67.
Advancing issues led decliners 8 to 7 on the New York Stock Exchange. Volume came to 1.46 billion shares, compared with 1.38 billion at the same point Monday.
The Russell 2000 index fell 3.40 to 397.41.
Overseas, Japan’s Nikkei stock average rose 3.5 percent. In Europe, Germany’s DAX index advanced 0.5 percent, Britain’s FTSE 100 slipped 0.5 percent, and France’s CAC-40 lost 0.5 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com