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Stocks End Mixed As Buyers Pause; Bond Yields Ease

From Reuters and Bloomberg News

Stocks were mixed Tuesday as investors caught their breath after pushing major market gauges to fresh 2003 highs the previous day.

With no major economic numbers released Tuesday and the third-quarter earnings season tailing off, investors awaited more economic data to show a strengthening economy before pushing stocks higher, analysts said.

“The economic numbers [on Monday] were very strong, which is very encouraging, but we had nothing” Tuesday, said Stephen Carl, principal and head of U.S. equity trading at Williams Capital Group.

Today, “You’ve got factory orders numbers coming out and non-manufacturing numbers, so it will be interesting to see if there’s a follow-up,” he said.

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Investors also are waiting for earnings from technology bellwether Cisco Systems and Qualcomm, which are expected today, said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access.

“Qualcomm will affect the entire telecom and wireless space, and Cisco has broader ramifications for the technology universe,” he said.

The Dow Jones industrial average and the Standard & Poor’s 500 index on Monday hit their highest levels in 17 months, while the technology-dominated Nasdaq composite reached a 21-month peak. A surprisingly strong reading on the manufacturing sector helped spur the gains.

On Tuesday, the Nasdaq index fell 9.74 points, or 0.5%, to 1,957.96. The Dow lost 19.63 points, or 0.2%, to 9,838.83 -- snapping a six-session winning streak. The S&P; 500 slid 5.77 points, or 0.5%, to 1,053.25.

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Despite lower closes on all three indexes, winners led losers by almost 7 to 6 on the New York Stock Exchange and were about even on Nasdaq. Trading was active.

Even as the S&P; 500 retreated, a benchmark for smaller stocks reached a record for the second straight day. The S&P; SmallCap 600 index rose 0.12 point to 261.55, bringing its year-to-date gain to 33%.

The Morgan Stanley cyclical index, which tracks companies that perform best in a reviving economy, added 1.41 points to 620.81, also a record since it was created in 1991.

The benchmark, which counts 3M, U.S. Steel and Ford Motor among its 30 members, is up 38% this year.

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Treasury bond yields dipped as a private survey found that employers announced plans in October to cut more jobs than in September, a sign the labor market may not be as strong as some economists forecast.

The report from Challenger, Gray & Christmas Inc. came as Treasury prices -- which move in the opposite direction of their yields -- were already moving higher. Some traders said that yields near their highest levels in two weeks offered value with the Federal Reserve expecting inflation to remain tame and the government borrowing less this quarter than it had forecast.

The yield on the benchmark 10-year Treasury note slipped to 4.30% from 4.34% on Monday.

Meanwhile, the dollar had its biggest slide against the yen in six weeks in New York trading after a survey found business confidence in Japan improved, fueling optimism that the country’s economy is growing.

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A Nihon Keizai newspaper poll of 107 Japanese company presidents found most think the economy is rebounding, and Goldman Sachs Group Inc. raised its estimate for Japanese third-quarter growth. The Nikkei-225 stock index rose 2.7%, its biggest gain in two months.

In other highlights:

* Shares of McDonald’s rose 72 cents, or 2.8%, to $26.11, making it the Dow’s biggest percentage gainer after the company created a new post responsible for global restaurant operations and put its vice chairman in charge of Japan as it moved to shore up weak international sales.

* Novell rose $1.28, or 21%, to $7.33. The business software maker said it agreed to acquire Linux software developer Suse Linux of Germany. Novell also said IBM planned to make a $50-million investment in its convertible preferred stock.

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* Cima Labs jumped $1.47 to $32.78. Cephalon, which fell 57 cents to $45.86, said late Monday that it agreed to acquire Cima.

* Gillette climbed $1.65 to $34.15. The world’s largest razor maker said quarterly profit rose a record 17.5%, helped by the weaker dollar and strong sales.


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