Profit-taking pushes US stocks lower

A burst of profit-taking sent stocks lower on Wall Street today as investors cashed in some of their winnings following two weeks of sizable gains. The Dow Jones industrials fell 118 points.

“The market seems a little tired,” said Michael Murphy, head trader at Wachovia Securities. “We’ve had a pretty good mood the last eight days, so some sort of pullback or digestion of the recent gains would be in order.”

The Dow closed down 118.72, or 1.3%, at 8,872.07. That followed a 213-point, or 2.4%, rise on Monday.

The broader market was also lower. The Nasdaq composite index fell 17.97, or 1.3%, to 1,376.57, having risen 2.5% in the previous session. The Standard & Poor’s 500 index declined 13.27, or 1.4%, to 937.43, following a gain of 2.4%.

Among the losers were companies that posted disappointing earnings results. Agilent Technologies, down dlrs 1.24 at dlrs 16.20, and pharmaceutical company Andrx, down 26 cents at dlrs 23.82, fell on bigger-than-expected losses.

But analysts said investors were still fairly upbeat, a sentiment that has allowed the market’s three major indexes to advance for two weeks in a row, the first time they have managed that feat since the two-week period ending March 8.

Still, they say stocks are still vulnerable to sell-offs in the coming weeks, especially as some companies issue third-quarter profit warnings that will remind investors that the US economy continues to struggle. The market’s gains are limited until there are concrete signs of an economic turnaround, analysts said.

The Commerce Department reported that the US trade deficit decreased marginally to dlrs 37.2 billion in June amid a surge in exports. But the report had little, if any, effect on trading. The deficit was still the country’s second-largest yet.

Stocks that rose today included retailer Home Depot, up dlrs 1.22 to dlrs 30.25 on better-than-expected second-quarter earnings.

Qwest Communications advanced 71 cents to dlrs 2.95 after saying it will sell its yellow pages business to a group of financiers for more than dlrs 7 billion.

Declining issues outnumbered those advancing by 4 to 3 on the New York Stock Exchange. Volume was light as many investors were away on holiday.

The Russell 2000 index, which tracks smaller company stocks, fell 3.45, or 0.9%, to 397.84.