Stocks fall, ending two-day advance; retreat expected

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

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

The Nasdaq composite index slid 37.60 to 1,464.04, while the broader Standard & Poor's 500 index was down 5.23 at 1,007.04. Analysts said the retreat was expected.

"The market is trying to bottom," said Michael Strauss, managing director at Commonfund. "The economy continues to be the battleground and we're getting some weakness associated with the terrorist attacks."

Many on Wall Street appear hesitant to make any big moves until they have a better idea of the form and timing of the U.S. response to the Sept. 11 assaults on the Pentagon and World Trade Center.

Those concerns, as well as profit-taking from Monday's big rally, appeared to drive much of Wednesday's trading.

IBM dropped $3.15 to $91.30 and Sun Microsystems fell 25 cents to $8.44 on fears that businesses will have less to spend on technology products.

Delta Air Lines gained 34 cents to $24.86 after saying it would cut up to 13,000 jobs because of declining air travel. Companies considered less risky in times of uncertainty, including pharmaceuticals and consumer goods, saw modest gains.

"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, but not directly because of terrorist worries. Despite concern that a Middle East crisis could hurt U.S. oil supplies and access, analysts said the sector was down because investors fears the economy might tip into recession.

The market appeared to be more stable than it was last week, when the Dow posted a one-week record loss of 1,369 points. Some analysts said the eight interest rate cuts and tax cuts 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."