Wall Street pulls back
Wall Street pulled back today as wary investors decided to cash in recent gains despite upbeat news on IBM Corp. and Intel Corp.
Analysts said many investors were again questioning current stock valuation levels after several weeks of advances. A suicide car bombing in Saudi Arabia that killed 17 people over the weekend also weighed on stocks.
“People are being guarded,” said Paul McManus, senior vice president and director of research at Independence Investment LLC. “People are looking at the market and wondering, ’Have I missed the rally, can I continue to be aggressive at these levels?”’
The bombing in Saudi Arabia “also was somewhat disconcerting,” he said. “People might try to assess how bad it can get or whether it portends anything further.”
The Dow Jones industrial average closed down 53.26, or 0.5 percent, at 9,756.53, having edged up 0.1 percent last week.
The broader market also retreated. The Nasdaq composite index declined 29.10, or 1.5 percent, to 1,941.64, following a weekly advance of 2 percent. The Standard & Poor’s 500 index fell 6.10, or 0.6 percent, to 1,047.11, having gained 0.2 percent.
Today, the United States said it would help Saudis on its war on terror after the bombing of a Riyadh housing complex. Saudis blamed the attack on al Qaida militants.
International Business Machines Corp. gained 1.69 to 89.95 after Barron’s published a cover story saying the company should benefit from a rebound in corporate computer spending.
But Intel fell 48 cents to 33.39 even though J.P. Morgan Securities raised the chip maker’s stock rating to ”overweight” from “neutral.”
Investors have sent stocks higher in recent weeks on optimism for a strong economic recovery. But with the earnings season winding down and stocks near 52-week highs, investors have little motivation to push the market significantly higher, analysts say.
Since hitting a low on March 11, the Dow has gained 30 percent, the Nasdaq is up 53 percent, and the S&P has risen 31 percent.
“The early portions of the economic recovery are already priced into the markets,” said Subodh Kumar, chief investment strategist for CIBC World Markets. He believes the main gauges will be confined to a trading range for the next several months, with the S&P hitting an upper range of 1,075, the Dow possibly reaching 10,000 and the Nasdaq hovering near the 2,000 mark.
“For investors, sideways and rangebound trading after the strong upswing of the last year is actually quite healthy, I think,” Kumar said.
Tyson Foods Inc. rose 24 cents to 14.47 after the meat and poultry processor reported quarterly earnings that beat Wall Street’s estimates.
Decliners included R.R. Donnelley & Sons Co., which fell 1.47 to 26.56, after the commercial printer said it would acquire Canadian printer Moore Wallace Inc. for about 2.8 billion.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Volume was light.
The Russell 2000 index, which tracks smaller company stocks, fell 9.75, or 1.8 percent, to 533.21.
