Wall Street Catches Its Breath
Blue chips fell Tuesday, as profit-takers pocketed nearly a third of the big gains amassed over the prior two days, but tech stocks rose on bullish analyst comments about Intel Corp., stretching the Nasdaq to its longest winning streak in two months.
The Dow Jones industrial average — dropped 153.41 points, or 1.45 percent, to 10,433.41, according to the latest data, but the Nasdaq composite — climbed 6.98 points, or 0.38 percent, to 1,866.30. It was the third straight up day for the tech-heavy market measure, the first three-day gain since early January.
The benchmark Standard & Poor's 500 — shed 7.71 points, or 0.67 percent, to 1,146.13.
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"The rate at which the market was going up in the last two days is not a rate you would expect to continue too much," said Howard Kornblue of ING Pilgrim, which manages $18 billion. "Always expect backing and filling and what we are getting here is the backing part."
Said Bill Barker, investment consultant at RBC Dain Rauscher: "We've had a very strong run and now traders want to take some money off the table. These gyrations don't mean a lot after an extended run like we've seen, though. I'd be more concerned if we were selling off after several days of the market doing nothing."
Intel rose 85 cents to $32.70. Intel, the No. 1 maker of semiconductors for computers, climbed after Morgan Stanley raised its rating on the chip leader to "strong buy" from "outperform".
The tech sector's relatively strong performance might also be attributed to the fact it had notched a smaller advance than blue chips in the recent run-up. As a result, it had fewer gains to lose in profit-taking — and investors might have decided it was time to invest there.
Blue chips fell on losses in retailers including Wal-Mart, which fell $2.22 to $60.76. Home Depot slid $2.40 to $47.50, a 4.8-percent loss. The sector had been steadily moving higher on anticipation it would benefit when the economy stabilized.
Consumer goods' companies also fell. Procter & Gamble lost $1.92 to $85.06.
Financial stocks were also higher, reflecting expectations that an improving economy will mean higher profits. Citigroup rose 9 cents to $ 47.70.
And some steel issues got a lift from word that President Bush would place tariffs on several types of imported steel to aid the U.S. industry. Bethlehem Steel gained 7 cents, or 13 percent, to 58 cents after the plan was announced.
Wall Street shrugged off a report from the Institute of Supply Management that showed non-manufacturing companies had their strongest rate of growth in business activity and new orders in 15 months during February.
The data was the latest indication that the economy is emerging from recession, but it wasn't enough to discourage profit-taking because of lingering worries that this rally, like many before it, will ultimately fizzle.
Indeed, companies are expected to begin warnings about first-quarter results early next month. Too many negative outlooks could throw the market off course.
Still, there is a growing consensus that the economic and market outlook is turning around.
"This is the best action we've seen in a long time," Acampora said. "I'm very optimistic that this is the beginning of a positive upside mood for the market."
Advancing issues narrowly led decliners on the New York Stock Exchange. Volume came to 1.52 billion shares, compared with 1.61 billion Monday.