Stocks retreat as investors take profits
By Amy Baldwin AP Business Writer
NEW YORK (AP) – Weaker-than-expected revenue at Wal-Mart helped incite a round of profit-taking on Wall Street Tuesday, leaving stocks with moderate declines.
Analysts said the market had little reaction to overnight attacks in Saudi Arabia, which killed seven Americans.
While investors are growing more confident about the market, analysts expected some retreat after two straight winning weeks for blue-chip stocks and a four-week winning stretch for the broader market.
“It should be a minor pullback,” said Steven Goldman, chief market strategist, Weeden & Co. in Greenwich, Conn., noting the more upbeat tone among investors and on Wall Street.
Goldman added: “You have had this surge in the market and this surge is very different than the other rallies (during the three-year bear market). It is very broad-based. Every stock is participating. … This one has all the earmarks of being a broader-based, sustainable rally, and with that declines tend to be somewhat shallow.”
The Dow Jones industrial average closed down 47.48, or 0.5 percent, at 8,679.25, according to preliminary calculations. The loss was moderate compared with an advance of 235.51 over the previous two sessions.
The market’s broader gauges also gave back some recent gains. The Standard & Poor’s 500 index fell 2.81, or 0.3 percent, to 942.30. The Nasdaq composite index declined 1.72, or 0.1 percent, to 1,539.68.
Despite the declines, investors’ mood has been much more upbeat than it has been during the three-year bear market, particularly since companies reported surprisingly strong first-quarter profits. Investors had feared another litany of downbeat results, this time due to the buildup to war in Iraq.
Investors’ more positive outlook was clear Tuesday when they kept the market’s declines moderate despite disappointing news from Wal-Mart and news of overnight attacks in Saudi Arabia. Analysts said the market largely shrugged off news that attackers in Saudi Arabia’s capital Riyadh set off several suicide car bombs, which killed 20 people, including seven Americans.
“The overall tone of the market is very good, despite the negative news and concerns that this market is getting overextended,” said Brian Bush, director of equity research at Stephens Inc. in Little Rock, Ark.
At the end of Monday’s session, the Nasdaq had climbed 21.2 percent since March 11, when the market’s major indexes were at their lowest levels since hitting multi-year lows in October. The Dow had recouped 16 percent from that point, while the S&P had regained 18 percent.
Still, on Tuesday, investors punished companies whose results were disappointing. Wal-Mart fell $1.21 to $55.49 after meeting analysts’ first-quarter earnings expectations but missing their revenue estimates.
May Department Stores declined 42 cents to $22.17 after missing Wall Street’s earnings forecast by 2 cents a share.
Other earnings-related losers included energy concern El Paso Corp, which slipped 16 cents to $7.50 on first-quarter profits that missed analysts’ expectations by 5 cents a share.
Brokerage house downgrades pressured other individual stocks. Cisco Systems fell 20 cents to $16.47 after Sanford Bernstein cut its rating on the networker to “underperform” from “market perform.”
Pacific Sunwear dropped 95 cents to $23.39 after Fulcrum lowered its recommendation on the retailer to “sell” from “neutral.”
Declining issues outnumbered advancers about 7 to 6 on the New York Stock Exchange. Trading volume was light.
The Russell 2000 index, the barometer of smaller company stocks, rose 1.03, or 0.3 percent, to 419.23.
Overseas, Japan’s Nikkei stock average finished Tuesday down 0.4 percent. In Europe, France’s CAC-40 inched up 0.03 percent and Britain’s FTSE 100 gained 0.3 percent, while Germany’s DAX index lost 0.9 percent.
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