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10/9/2003

Streak is over as stocks take a dive

The Associated Press

NEW YORK — Wall Street retreated Wednesday, ending a five-day winning streak, as investors refrained from making big moves ahead of third-quarter earnings reports. Technology stocks suffered some of the biggest declines, giving back some of their gains from the past week.

With two-thirds of the Standard & Poor’s 500 companies set to report results in the next two weeks, analysts said investors were likely to stick with a cautious approach. Many investors are still holding on to a great deal of cash, but Wall Street observers remained optimistic.

“There are a lot of people out there, naysayers, who were anticipating big market declines in September and October and it hasn’t come to pass yet,” said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. “And here we are, nibbling on 52-week highs again.”

At the end of the trading day, the Dow Jones industrial average had lost 23.71 points, or 0.3 percent, to close at 9,630.90, according to preliminary calculations.

The broader markets also closed lower. The tech-dominated Nasdaq composite index lost 14.07, or 0.7 percent, closing at 1,893.78. The Standard & Poor’s 500 index declined 5.48, or 0.5 percent, to close at 1,033.77.

Although technology stocks were broadly lower, having advanced solidly over the previous week, some blue chip tech companies saw gains. IBM rose 96 cents to close at $92.66 and Oracle Corp. gained 43 cents to close at $12.63.

Investors were awaiting earnings reports from Internet search engine Yahoo! after the market’s close.

For tech stocks, it’s probably not going to be enough for companies to simply meet their estimates, said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “They’ll either have to beat their estimates significantly or issue upbeat guidance for the next three to six months,” he said.

Bellwether companies may hold special appeal for investors this week in all the major sectors, as they await third-quarter reports. If there’s enough positive news, it might tempt sidelined investors back into the market, said Tim Smalls, a trader at SG Cowen Securities.

“There’s your equity for the market,” Smalls said. “That’s the fuel for the rally.”

Thursday marks the first anniversary of the stock market’s reaching the bottom of its three-year slide. Since Oct. 9, 2002, the Dow has rebounded 32.2 percent from a five-year low, the Nasdaq is up 70 percent from its six-year low and the S&P 500 is up 33.1 percent from its six-year low.

Alcoa’s after-hours announcement Tuesday that it had beaten analyst expectations by 4 cents a share was warmly greeted Wednesday, as the world’s largest aluminum maker saw its shares go up 48 cents to close at $28.67.

Duke Energy Corp. gained 64 cents to close at $18.64 after the troubled utility said that its former president, Paul Anderson, would be its new chairman and chief executive.

Cole National Corp. rose $8.30, or 67 percent, to close at $20.69 after the eye care retailer announced it had received an unsolicited buyout offer from an undisclosed party.

Curative Health Services Inc. declined $4.60, or 25.2 percent, to close at $13.69 after the company lowered its expectations for the third quarter and the rest of the year, citing lower-than-expected revenue and rising operating costs.

Biovail Corp. fell $3.85, or 13.3 percent, to close at $25.20 after Banc of America Securities initiated coverage with a sell rating Wednesday. The Canadian firm’s stock has steadily lost value since it issued a profit warning Friday.

Shares of 99 Cents Only Stores fell $3.96, or 11.9 percent, to close at $29.44 after the discount chain warned its earnings would miss analyst expectations.

The Russell 2000 index, which tracks smaller company stocks, closed down 5.09, or 1 percent, at 515.68.

Declining issues outnumbered advancers about 3 to 2 on the New York Stock Exchange. Volume was light, with 1.242 billion shares, compared to 1.287 billion traded on Wednesday.

Overseas, Japan’s Nikkei stock average finished 2.6 percent lower Wednesday. In Europe, France’s CAC-40 dropped 0.2 percent, Britain’s FTSE 100 declined 0.1 percent and Germany’s DAX index gained 1.2 percent.