Dow falls after profit taking
Wall Street began the new year today with the same enthusiasm but also prudence that marked its big comeback in 2003 – after sending stocks higher sharply, investors changed course and took some profits in blue chips, leaving prices mixed.
Light volume exaggerated price moves, but the major indexes eked out gains for the week.
Barry Berman, head trader for Robert W. Baird & Co in Milwaukee, warned against reading too much into the results.
“The volume is very light,” he said. “I’d wait to see what the trading is like next week, when everyone is back.”
The Dow Jones industrial average was down 44.07, or 0.4%, at 10,409.85 but up 0.8% for the week.
Earlier in the day, after a stronger-than-expected report on manufacturing, the Dow was up more than 74 points.
Broader stock indicators were mixed. The Standard & Poor’s 500 index dropped 3.43, or 0.3%, to 1,108.49 but was up 1.1% for the week. The Nasdaq composite index rose 3.31, or 0.17%, to 2006.68 and was up 1.7% for the week.
Thomas Lydon, president of Global Trends Investments in Newport Beach, California, said the meandering market was a reflection of the low volume.
“On days like that, we sometimes see dramatic moves when buy or sell programmes kick in,” he said.
Still, Lydon said investors have good reason to be optimistic about the new year: it’s an election year, interest rates remain at 40-year lows and corporations chastised for bad practices have reformed.
“The market is starting to be fun again, but not yet to the point where cab driver are giving you investment tips,” he said.
For all of 2003, the Dow gained 25.3%, the Nasdaq surged 50% and the S&P 500 gained 26.4%.
The markets were closed yesterday for New Year’s.
The market initially rallied today after the Institute for Supply Management said its manufacturing index rose to 66.2 in December from 62.8 in November. Most analysts had expected the index to dip.
Norbert Ore, chairman of the institute’s business survey committee, said the reading meant “the manufacturing sector enjoyed its best month since December 1983.”
He said much of the momentum was in orders, which bodes well for economic growth in 2004.
Tim Connors, the chief investment officer for value equities at Delaware Investments in Philadelphia, said investors “are positive about the direction of the economy.”
He predicted Wall Street would have “a pretty good year, though certainly not the magnitude we saw last year,” with big companies leading the market in 2004.
Advancing shares were just slightly ahead of decliners on the New York Stock Exchange, with volume a light 1.14 billion shares.
The Russell 2000 index of smaller companies was up 3.94, or 0.7% at 560.85.
