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Stocks Finish Lower

September 10, 2003|From Times Staff and Wire Reports

Wall Street on Tuesday suffered its second decline in three sessions amid new doubts about the sustainability of the economy's recovery.

A disappointing sales forecast from wireless phone giant Nokia weighed on the market, as did a brokerage's downgrade of ratings on some retail stocks.

The Dow Jones industrial average fell 79.09 points, or 0.8%, to 9,507.20, and the Standard & Poor's 500 was off 8.47 points, or 0.8%, to 1,023.17.

The Nasdaq composite index lost 15.19 points, or 0.8%, to 1,873.43.

Losers topped winners by 20 to 12 on the New York Stock Exchange and by 19 to 13 on Nasdaq. Trading was active.

After rallying for most of the last month, stocks slumped Friday after the government said the economy continued to shed jobs in August, despite other signs that business activity was accelerating.

The market rebounded on Monday, driving most major indexes to their highest levels in more than a year. But stocks quickly fell into the red Tuesday and stayed there.

Nokia slumped $1.07, or 6.3%, to $16, after saying it expected third-quarter revenue to be flat or slightly lower. That disappointed investors who were hoping for a more robust outlook.

"The market took its cue from Nokia," said John Caldwell, chief equity strategist for McDonald Financial Group in Cleveland. "As the market is anticipating, with its huge run-up, better earnings growth in the third and fourth quarter, we'll need confirmation from revenues as well."

Brokerage Goldman, Sachs & Co. hurt the retail sector by downgrading Home Depot to "in line" from "outperform," citing concerns that higher mortgage rates could damp consumer spending.

Home Depot slid $1.60 to $32.15 while rival Lowe's dropped $1.78 to $51.92.

Goldman also cut its ratings on Federated Department Stores, which dropped $1.38 to $42.44, and May Department Stores, which lost $1.14 to $25.20.

"This is a mild-mannered pullback in a market boiling for six months," said Larry Wachtel, market analyst at Wachovia Securities. "After six months in a bull market, normally you retract one-third to one-half of the advance. You haven't come close here. People just don't want to let go."

The Dow has risen 26% since March 11 while Nasdaq has soared 47%.

In the bond market, prices of Treasury issues gained. The yield on the 10-year T-note fell to 4.36% from 4.43% on Monday.

The Treasury will sell $16 billion of five-year notes today and $13 billion of 10-year notes on Thursday.

Among Tuesday's highlights:

* Nokia's rivals in the wireless phone market lost ground, but not much. Motorola eased 8 cents to $11.20 and Ericsson slid 17 cents to $17.15.

Elsewhere in the tech sector, Microsoft lost 47 cents to $28.37 and Intel dropped 39 cents to $28.79, while IBM was up 32 cents to $89.42.

* Research in Motion rocketed $6.31, or 22.3%, to $34.55, after the maker of BlackBerry pagers said results in the current quarter would far exceed analysts' estimates.

* Retail stocks were broadly lower after Goldman's rating downgrades. Target lost $2.15 to $38 and Zale fell $1.32 to $47.99.

* Stocks of most home builders fell, led by Pulte, down $1.61 to $66.87, and KB Home, off $1.68 to $57.51. But Newport Beach-based William Lyon Homes bucked the trend, surging $2.86 to $44.26, a record high.

* Irvine-based online commerce company Autobytel continued a recent hot streak, rising 52 cents to $9.61, a 52-week high. The stock has soared 59% since Aug. 12.

* Overseas, bullish investors continued to push Tokyo stocks higher: The Nikkei 225 index rallied 238.38 points, or 2.2%, to 10,922.04, a 14-month high.

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