Caution ruled Wall Street Thursday, causing blue
chip and technology stocks to fluctuate as investors searched for
news on which to buy or sell.
A day after the Federal Reserve's latest interest rate cut,
analysts said investors remain fearful about where the economy
and corporate profits are headed. A manufacturing report Thursday
suggesting the U.S. economy failed to grow for the first time in
nearly a decade intensified those concerns.
"I think investors are worried. A lot of them lost a lot of
money in 2000 and are going to need more convincing to get back
into the market," said Barry Hyman, chief investment strategist at
In afternoon trading, the Dow Jones industrial average slid
13.64 to 10,873.72, after moving in and out of positive territory
The Nasdaq composite index was off 15.98 at 2,756.75, after
similar vacillations. The broader Standard & Poor's 500 index fell
3.99 to 1,362.02.
Earnings reports from a handful of non-technology companies got
a mixed reception, despite results generally in line with
Quaker Oats slipped 90 cents to $94.10 despite meeting earnings
forecasts. Investors rewarded Mattel, which rose 64 cents to $15.50
after its results beat analysts' estimates.
Analysts said Thursday's trading reflected investors' worries
about the economy and corporate profits in months ahead. Many on
Wall Street expected weak reports for the fourth quarter, and so
the focus now has turned to the quarters ahead.
"The market is just biding its time here," said Hyman, the
Weatherly Securities strategist. He believes it will take a
catalyst, such as another surprise rate cut from the Fed in
February, for the market to rally.
He said the Fed's rate cut Wednesday had little effect on stocks
because it had been so widely anticipated that many investors had
already priced it into the market.
Tech stocks were mixed, with Dow component IBM notching a 70
cent gain to $112.70, while Web portal Yahoo! dropped $1.56 to
Yahoo's drop, in particular, reflects concerns about what it is
ahead. The Web portal's earnings are heavily tied to advertising,
which suffers in a slowing economy.
Also Thursday, a new manufacturing report provided evidence
suggesting that the overall economy is declining. The National
Association of Purchasing Management said manufacturing activity in
January slumped to its lowest level since March 1991.
That added to concerns prompted by a government report Wednesday
showing economic growth in the fourth-quarter at its weakest level
in five years.
Advancing issues narrowly outnumbered decliners on the New York
Stock Exchange. Volume came to 482.45 million shares, compared with
482.00 million Wednesday at the same time.
The Russell 2000 index fell 2.04 to 506.30.