Stocks fall Monday amid mixed data on the economy

AP Business WriterNEW YORK (AP) -- A mix of economic data Monday left stock investors puzzling over how long the economy will take to recover and prompted many market players to cash in recent profits.

The selling was minor compared with how strongly stocks have rallied for two months as Wall Street has grown more confident of an economic turnaround in 2002. However, analysts said the upturn still is vulnerable amid negative or even varied economic news, which pushes the recovery deeper into next year.

"Investors are certainly going to be looking at every economic number, because the big question is: When will the economy and earnings recover? That is the whole issue," said Hugh Johnson, chief investment officer at First Albany Corp.

The Dow Jones industrial average closed down 87.60, or 0.9 percent, at 9,763.96, according to preliminary calculations. The Dow preserved some of its 139-point advance from the previous two sessions.

The broader market was also weaker. The Nasdaq composite index fell 25.68, or 1.3 percent, to 1,904.90 and the Standard & Poor's 500 index declined 9.55, or 0.8 percent, to 1,129.90.

While investors have been more hopeful that the economy will recover sooner, rather than later next year, any hints of weakness have moved them to lock in their recent gains. A mix of negative and positive reports out Monday gave them little feel for the economy's direction, and provided an impetus to sell.

The Commerce Department reported that in October, personal incomes, suffering the huge number of layoffs following the Sept. 11 terror attacks, were flat for the second straight month, the worst showing in more than seven years.

Meanwhile, manufacturing activity declined for the 16th straight month, although at a slower pace, according to the National Association of Purchasing Management.

The disappointing readings overshadowed two sets of positive news from the Commerce Department. First, Americans, attracted by free auto financing deals, pushed their spending up by a record 2.9 percent in October. And, construction spending rose 1.9 percent in October, the first monthly gain since April.

Analysts have cautioned that the market will experience pullbacks as investors are reminded of the economy's weakness. But they also say stocks remain quite strong, with the Dow now up 18.6 percent from its low of 8,235.81, where it closed Sept. 21 following the terror attacks. The Nasdaq is 33.8 percent above its post-attack low; the S&P 500, up 17 percent.

"It's a mixed bag, but it is a market in transition overall," said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray, adding that he believes the market is in an upward trend.

Automakers, which indicated business remains difficult, were among Monday's losers. Ford fell $1.15 to $17.79 amid reports it of a cost-cutting plan later in the week and of a warning of a bigger-than-expected fourth-quarter loss. By late afternoon, Ford issued a statement saying it is cutting retirement and health benefits for 45,000 white-collar workers and laying off 630 people.

But Ford did not confirm that it will report a loss of 35 cents a share, bigger than the 10-cent loss analysts were expecting, in the year's final three months as reported Sunday by The Detroit News.

General Motors declined 59 cents to $49.11 after saying November car sales fell about 10 percent, and that it doesn't see an economic recovery until late 2002. On a positive note, GM said truck sales rose more than 36 percent in November.

Tech losers included software maker Oracle, which slipped 33 cents to $13.70 after Merrill Lynch lowered its earnings and revenue estimates for fiscal year 2002 and the fiscal second quarter. The brokerage cited a challenging environment for software spending.

Losses were otherwise widespread and were mostly attributable to profit taking. IBM fell $1.39 to $114.20, General Electric tumbled $1.53 to $36.97 and Citigroup declined $1.04 to $46.86.

Declining issues outnumbered advancers nearly 3 to 2 on the New York Stock Exchange. Volume was heavy.

The Russell 2000 index, which tracks smaller company stocks, fell 3.75, or 0.8 percent, to 457.03.

Overseas, investors bid stocks lower Monday. Japan's Nikkei stock average finished down 3.1 percent. In Europe, France's CAC-40 fell 0.3 percent, Britain's FT-SE 100 declined 0.8 percent and Germany's DAX index finished down 0.03 percent.

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