US stocks down

Investors collected profits today, sending Wall Street moderately lower. A surge in unemployment claims and disappointing earnings reports also fed worries that the economy was not keeping pace with the market’s recent gains.

The Dow Jones industrial average closed down 75.62, or 0.9%, at 8,440.04. The retreat followed a two-day gain of 186.76.

The broader market was also down. The Nasdaq composite index fell 8.94, or 0.6%, to 1,457.22, following a two-day gain of 41.79 that allowed it to close on Wednesday at its highest level since December 2. The Standard & Poor’s 500 index declined 7.59, or 0.8%, to 911.43, having risen 27.01 in the previous two sessions.

The losses were largely attributable to a natural retreat following two days of rallies, but also reflected investors’ discomfort with current stock valuations. Still, analysts expect the market to resume its upward track given how first-quarter earnings results have for the most part exceeded Wall Street’s expectations.

Investors were also motivated to sell by a Labour Department report that the number of Americans filing new claims for unemployment rose by 8,000 last week to 455,000, the highest level in a year.

There was some good economic news, however. The Commerce Department said orders to US factories for durable goods, those items expected to last at least three years, rose by an unexpected 2% in March.

Analysts had forecast a decline of 1%. Still, the strong reading was somewhat lessened by the fact that much of it was due to a surge in demand for military equipment needed for the war in Iraq, not to businesses and consumers buying more big-ticket items.

Profit taking contributed to the market’s losses today. BellSouth fell 67 cents to 23.54 after rising 2.50 on Wednesday on profits that topped Wall Street’s forecast by 6 cents a share.

Companies that reported disappointing earnings today also fell. Barr Laboratories dropped 5.50 to 52.70 after the drug maker posted fiscal third-quarter earnings that were a penny shy of expectations.

Sara Lee fell 2.01 to 17.73 on fiscal third-quarter earnings that were also penny a short of estimates and a profit warning for the current quarter.

Declining issues outnumbered advancers slightly more than 4 to 3 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, fell 2.68, or 0.7%, to 392.29.