US stocks fall

A brief surge of enthusiasm evaporated on Wall Street today, gradually pulling stock prices lower in what turned out to be another lacklustre session.

Blue chips fell into losing ground in the last half hour of trading, while technology issues stumbled earlier on a profit warning from Gateway.

Stocks initially had a healthy, widespread advance on news that the economy grew by a stronger-than-expected rate in the fourth quarter. An increase in business activity in the Chicago area also prompted strong buying.

But the market repeated a now-familiar pattern of retrenching whenever it climbed to a point where investors believed it would be prudent to cash in their profits.

The Dow Jones industrial average closed down 21.45, or 0.2%, at 10,106.13, having risen as much as 111 in the first hour. The Dow’s moves mirrored those of Wednesday, when it surged nearly 140 points on positive comments from Federal Reserve Chairman Alan Greenspan, but then closed up a slim 12.32.

The broader market also finished lower. The Standard & Poor’s 500 index declined 3.16, or 0.3%, to 1,106.73, while the Nasdaq composite index fell 20.39, or 1.2%, to 1,731.49.

For much of today, there was modest buying activity pegged largely to a Commerce Department report on the gross domestic product. GDP rose at an annual rate of 1.4% in the final three months of 2001, surpassing analysts’ expectations for a 0.9% increase.

The Purchasing Management Association of Chicago also had positive news, saying its index of area business rose to 53.1% in February on a seasonally adjusted basis from 45.1 in January. A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 signals a contraction.

The Chicago survey is considered a reliable forecast of the index of the Institute for Supply Management, formally the National Association of Purchasing Management, which is due to be released tomorrow.

But Wall Street’s response, from enthusiastic to uninspired, was similar to Wednesday when stocks advanced strongly after Fed Chairman Greenspan told Congress the recession was nearly over, although the economic recovery would not be particularly robust. Stocks later lost most of those gains.

Analysts attributed the market’s inability to hold its gains to the fact that the pace of the economic recovery would likely be slow.

The tech sector fell after a first-quarter profit warning from Gateway. Gateway fell 50 cents to dlrs 4.60.

Other tech losses came from Dow industrial Intel, down dlrs 1.31 at dlrs 28.58, and Dell Computer, off 58 cents at dlrs 24.69.

The Dow’s earlier advance was crushed by Disney, which fell dlrs 1.25 to dlrs 23, and 3M, which stumbled dlrs 1.07 to dlrs 117.93. But Honeywell gained 97 cents to dlrs 38.12.

Another contributor to Wall Street’s cautious mood has been investors’ worries about corporate bookkeeping practices in the wake of Enron’s collapse.

Advancing issues narrowly outnumbered decliners 15 to 14 on the New York Stock Exchange where trading volume was light.

The Russell 2000 index, which measures the performance of smaller company stocks, fell 3.24, or 0.9%, to 469.37.