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Fri, Feb 23, 2001 EST
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Stocks Move Lower as Investors Take Profits
By Amy Baldwin   Associated Press
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NEW YORK — Skeptical investors sent stock prices falling Tuesday despite hints of future interest rate cuts and a retail sales report that suggested the economy isn't as weak as Wall Street has feared.

The market suffered a letdown after congressional testimony from Federal Reserve Chairman Alan Greenspan, who appeared to advocate a smaller interest rate reduction than investors want or have anticipated. Wall Street is worried that smaller cuts will take longer to reinvigorate the economy.

"That's sort of disappointing the markets," said Hugh Johnson, chief investment officer for First Albany Corp.

The Dow Jones industrial average fell 43.45 to close at 10,903.32, according to preliminary calculations.

Broader market indicators also finished lower. The Nasdaq composite index dropped 61.93 to 2,427.73, while the Standard and Poor's 500 index ended down 11.51 at 1,318.80.

The market saw Greenspan's testimony as a sign to sell and lock in recent profits. Investors had been expecting the Fed, which in January twice dropped rates a half point, to lower rates by another half point in March.

"Investors are just a little less convinced that we are going to get the (economic) recovery that he is forecasting," Johnson said.

While Greenspan, who testified before the Senate Banking, Housing and Urban Affairs Committee, said he believes the economy will improve in the second half of the year, investors are less sure, Johnson said.

"If the markets saw a recovery in the economy and earnings coming, we would have strong markets today," Johnson said.

A positive sign for the economy came earlier from the Commerce Department's report that retail sales rose 0.7 percent during January, slightly ahead of analysts expectations and the biggest jump in four months. Consumers spent on a wide variety of goods, from cars to clothes to building supplies.

The retail report "was an important piece of evidence to show the economy is not spiraling down into a recession," said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co.

The increase in consumer spending drew investors back toward some retailers including Gap, up 72 cents at $28.73 and Home Depot, which rose 58 cents to $46.31.

But other blue chips fell as the retail spending news couldn't compensate for investors' disappointment over Greenspan's testimony and fears about the anemic economy. Citigroup was down 86 cents at $54.59, and Coca-Cola lost 86 cents to trade at $59.96.

Most analysts expect lower borrowing costs to boost economic growth in the second half of the year, especially in the long-battered tech sector.

Still, tech stocks were mostly lower. Intel lost $2.06 to close at $32.50, and Microsoft fell 55 cents to $58.20. But Hewlett-Packard rose 74 cents to $33.34.

Advancing narrowly outnumbered decliners 16 to 15 on the New York Stock Exchange. Volume was 1.06 billion shares, compared with 1.01 billion at the same point Monday.

The Russell 2000 index finished down 2.78 at 502.57.

Stocks closed lower in overseas trading. Japan's Nikkei index fell 1.1 percent, Britain's FT-SE 100 index slipped 0.2 percent, Germany's lost 0.1 percent and France's CAC-40 index declined 0.4 percent.

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