Stocks Suffer Another Down Day
Blue-chip stocks lost ground Tuesday for the fifth time in six sessions, as investors continued to cash in some of the profits racked up in recent months.
Trading volume was light because banks and the bond market were closed in observance of Veterans Day.
Share prices have been unable to gain much traction over the last week despite a barrage of favorable economic news. Some analysts say the market’s strong rally in October, adding to its sharp move up since March, has left many stocks ripe for profit taking.
“Investors are looking to reposition their portfolios and lock in gains they generated,” said Jack Caffrey, equity strategist at J.P. Morgan Private Bank in New York. “Given the losses most investors have from the prior years, you have some fuel to take those gains.”
The Dow Jones industrial average closed down 18.74 points, or 0.2%, at 9,737.79. The index has given up 120 points since reaching a 17-month closing high of 9,858.46 on Nov. 3.
The Nasdaq composite index fell 10.89 points, or 0.6%, to 1,930.75, and the Standard & Poor’s 500 slipped 0.54 point, or 0.1%, to 1,046.57.
Falling stocks outnumbered winners by 19 to 13 on the New York Stock Exchange and by 20 to 11 on Nasdaq.
The government’s report on Friday that the economy added a net 126,000 nonfarm jobs in October gave investors more confidence that the recovery will continue in 2004, experts say. But that assumption has been built into stock prices for months, many say.
Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn., said Wall Street’s advance would find it tougher going in the near term.
“It’s not going to be straight up as it has been the past eight to nine months,” he said.
Still, profit taking in the U.S. market in recent days has been mild compared with the selling in the Tokyo market.
The Nikkei-225 index slumped 297.50 points, or 2.8%, to 10,207.04 on Tuesday, bringing its loss to 8.6% since it reached a 17-month closing high on Oct. 20.
Japanese stocks were hit by Internet bellwether Softbank Corp.’s report of a large first-half loss, and by ongoing fears that the strong yen will hurt exporters’ earnings.
The yen was little changed on Tuesday at 108.67 per dollar, near a three-year high.
The euro rallied modestly against the dollar, rising to $1.151, after a German industry report showed investor confidence in Europe’s largest economy climbed to the highest level in 16 months.
Gold made a run toward a fresh seven-year high, as near-term futures in New York rose $1.50 to $388.10 an ounce. The recent peak was $388.90 on Oct. 24.
Among Tuesday’s highlights:
* EchoStar tumbled $4.75 to $32.05 after the satellite broadcaster late Monday said subscriber growth at its Dish Network was below expectations amid rising competitive pressure from DirecTV and from cable companies.
Also in the entertainment sector, Fox Entertainment fell $1.05 to $28.63, Univision lost $1.22 to $32.56 and Young Broadcasting slumped $1.58 to $19.23.
* Some semiconductor-related shares continued their recent advance. Broadcom gained 87 cents to $35.99, KLA Tencor rose 82 cents to $59 and Intel inched up 2 cents to $33.41.
* PacifiCare Health Systems dropped $2.73 to $52.37. The Southland-based health-care company said it sold 3.8 million new shares at $52.95 each and would use the proceeds to pay off debt.
* Vertex Pharmaceuticals plunged $4.65 to $8. The drug maker said it stopped testing an experimental rheumatoid arthritis medicine because animals that got the product experienced liver damage.
