Stocks fall back amid nervous profit-taking

AP Business WriterNEW YORK (AP) -- Stocks fell back Wednesday as investors, wary about the economy and awaiting the U.S. response to the Sept. 11 terrorist attacks, collected profits after Wall Street's two-day advance.

Analysts said the retreat was to be expected, given the week's earlier gains and the economy's ongoing troubles.

"Obviously we've had some slippage, but if we compare where we are today to where we were last week ... this isn't a significant selloff," said Michael Strauss, managing director at Commonfund. "The market is trying to bottom. The economy continues to be the battleground and we're getting some weakness associated with the terrorist attacks."

The Dow Jones industrial average fell 92.58 to 8,567.39, according to preliminary calculations, giving back nearly a quarter of its 424-point advance of Monday and Tuesday.

The Nasdaq composite index slid 37.61 to 1,464.03, while the broader Standard & Poor's 500 index was down 5.23 at 1,007.04.

Many on Wall Street are hesitant to make any big commitments until they have a better idea of the form and timing of U.S. retaliation for the assaults on the Pentagon and World Trade Center.

"You don't know what might happen Saturday, if that might be when retaliation or something happens, and how that will affect the market," said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank. "So you don't want to take many chances."

Those concerns, as well as profit-taking from Monday's big rally that sent the Dow up 368 points, appeared to drive much of Wednesday's trading.

Amont tech stocks, IBM dropped $3.15 to $91.30 and Sun Microsystems fell 25 cents to $8.44 -- a loss of about 3 percent for each -- after Goldman Sachs cut their earnings estimates on fears companies will have less to spend on both firms' products as they recover from the assaults.

Reaction to the economic fallout wasn't all negative.

Delta Airlines gained 34 cents to $24.86 on news of 13,000 job cuts, about 15 percent of its work force, because of declining air travel following the terrorist attacks two weeks ago.

The other light buying was concentrated in sectors considered less risky in times of uncertainty, including pharmaceuticals and consumer goods. Johnson & Johnson rose $1.18 to $54.12, while Procter & Gamble climbed 13 cents to $71.12.

"Are you going to change your food consumption or amount of shampoo you buy because of the economy? No," Strauss said. "But you might change your mind about luxury items."

Oil stocks prices were weak, too -- but not directly because of terrorist worries. Despite some concerns that a Middle East crisis could hurt U.S. oil supplies and access, analysts said the sector was down because of investors' greater fears that the economy might tip into recession, creating less demand. Valero Energy dropped 77 cents to 33.41.

Bad earnings reports also drove selling. Micron Technology plummeted $3.99 to $17.25, a 19 percent loss, after reporting a fourth-quarter earnings loss twice what analysts were expecting.

Market watchers attributed some of the decline to the usual end-of-quarter trading by fund managers seeking to adjust their portfolios. The third quarter ends Sunday.

The market appeared to be more stable than it was last week, when the Dow fell 1,369 points, its worst performance since the Depression. Although analysts agree more tough times are ahead for the markets, there is also some optimism.

They believe the eight interest rate cuts and tax cuts so far this year, combined with billions of dollars in aid packages for businesses affected by the terrorist attacks, will eventually stimulate the economy.

"This is a difficult environment and it would be difficult for the market to put together several days of advance," said Robert Streed, portfolio manager at Northern Select Equity Fund. "Still, I think there's a very high probability that a month from now we'll be higher."

Declining issues narrowly led advancers 8 to 7 on the New York Stock Exchange. Volume came to 1.52 billion shares, compared with nearly 1.60 billion Tuesday.

The Russell 2000 index fell 6.40 to 389.78.

Overseas, Japan's Nikkei stock average dropped 0.5 percent. European stocks fared better. Germany's DAX index gained 2.2 percent, Britain's FT-SE 100 rose 0.7 percent, and France's CAC-40 advanced 1.9 percent.

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