Stocks post modest losses following U.S. retaliation
AP Business WriterNEW YORK (AP) -- The stock market greeted news of U.S. military attacks on the Taliban in Afghanistan quietly Monday, with prices falling moderately as investors tried to discern what the action would mean for the country and the economy.
While tech shares eked out a tiny gain, investors mostly locked in profits from last week's rally.
The market was worried that the United States will suffer more terrorism after American and British forces conducted a second day of missile attacks in Afghanistan, retaliating for the Sept. 11 terrorist assaults. Investors are also concerned about how long and how much the weakened economy will suffer following the attacks.
The Dow Jones industrial average closed down 51.76 at 9,068.01, according to preliminary calucations, after having risen 272.21, or 3.1 percent, last week.
The broader market finished mixed. The Nasdaq composite index inched up 0.67 to 1,605.97 to just barely claim its first five-session winning streak since the week of June 25. Last week, the tech-focused index rose 106.50, or 7.1 percent.
The Standard & Poor's 500 index, Wall Street's widest measure, fell 8.94 to 1,062.44.
Monday's mild pullback was expected given the political uncertainty and last week's rally, spurred by the Federal Reserve's ninth interest rate cut of the year and a push by President Bush for an economic stimulus package worth $60 billion.
"The market is attempting to stabilize," said Alan Ackerman, executive vice president of Fahnestock & Co.
Analysts were also encouraged by the Nasdaq's narrow gain and that blue-chip selling wasn't greater.
"Markets have historically recovered from catastrophes with a decent relief rally. It appears we are in one of those right now," Ackerman said.
Trading volume was lighter than normal, which could be attributed partly to traders' caution, as well as the Columbus Day federal holiday. There also were no major third-quarter earnings reports due to be released.
"This is a combination of things. There is some concern on the part of some investors about the retaliation. There is also some ordinary profit taking from the extraordinary strong run," said Bill Barker, investment strategy consultant for Dain Rauscher in Dallas, who also noted the holiday.
"Actually, the market is holding better than you might expect given those things," Barker said.
Blue chip losers included the nation's three big automakers, trading lower on a report in the Financial Times that Ford Motor, General Motors and DaimlerChrysler are slashing production by a further 196,000 vehicles before the end of the year. Ford fell 38 cents to $17.29, General Motors lost 71 cents to trade at $41.65, and DaimlerChrysler slipped 25 cents to $33.87.
Losses were spread across sectors, indicating investors' unwillingness to bet on any business. Banker J.P. Morgan Chase fell 97 cents to $32.44, while Wal-Mart declined $1.29 to $51.11. Fast-food chain Wendy's stumbled 66 cents to $26.54 after issuing a third-quarter profit warning.
The tech sector fared a little better, posting narrow gains and losses for the most part. Dell Computer rose 56 cents to $23.12 and Cisco Sytems inched up 11 cents to $15.05. Both companies contributed to last week's rally by affirming their earnings forecasts last week.
But Nextel Communications fell 80 cents to $7.94 after Merrill Lynch reduced its rating on the wireless networker's stock.
Analysts expect the market to fluctuate in a narrow range throughout the week as investors continue to trade carefully amid the retaliation.
"My feeling is, if there are no significant casualties on the U.S. side and the strikes continue with no difficulties, the market will be quite and stable with more of a wait-and-see attitude," Barker said.
Declining issues outnumbered advancers more than 3 to 2 on the New York Stock Exchange. Volume was 966.65 million shares, well below the 1.31 billion shares traded Friday.
The Russell 2000 index, which tracks the performance of smaller company stocks, fell 2.80 to 412.17.
Overseas markets were narrowly mixed Monday. Germany's DAX index inched up 0.2 percent, Britain's FT-SE 100 slipped 0.1 percent, and France's CAC-40 advanced 0.2 percent.
Japan's markets were closed for a holiday.
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