US stocks down in light trading

Wall Street retreated modestly in a day of light trading today, with the market in search of a direction following the Dow Jones industrials’ brief foray above 10,000.

Investors appeared unwilling to push the market significantly higher in the absence of news, and following the milestone glimpsed in the previous session.

“There are two things at play in this market,” said Kevin Caron, market strategist with Ryan, Beck & Co. ”You’ve got fundamental conditions in the economy improving, but on the other hand you have the very human response of money managers, who are facing the year end and trying to position their portfolios after two or three down years.”

The Dow closed down 1.56, or 0.02%, at 9,921.86. In the previous session, the index blipped above 10,000 for all of a minute.

The broader gauges were also essentially flat today. The Nasdaq composite index shut down 3.67, or 0.2%, at 1,904.65. The Standard & Poor’s 500 index fell 1.13, or 0.1%, to 1,059.05.

Investors were euphoric when the Dow tipped 3 points over the 10,000 mark on Tuesday, but they pulled back after the market failed to accelerate convincingly. They sought more profits when the Federal Reserve indicated interest rates would stay low for now.

Stocks have pushed higher for several weeks but analysts have questioned whether the values are justified, and the market remains vulnerable to the possibility of disappointing economic data and corporate earnings. Analysts were keeping a close eye on the Labour Department’s reports on producer and consumer prices, expected over the next week.

Luxury home builder Toll Brothers closed down 1.58 at 37.87 despite reporting better than expected earnings on strong revenue and orders for new homes. The entire sector broadly declined amid concerns about falling mortgage demand.

BellSouth closed down 25 cents at 26.96 after Morgan Stanley cut it to “equalweight” from “overweight”, in part because of concerns that the stock was overvalued. The telecommunications firm has gained more than 20% since the end of the first quarter.

AutoZone ended the day down 11.09 at 80.25 after reporting first-quarter earnings that beat analyst expectations by 7 cents a share. The car parts retailer, which recently launched a new tool product line, promised it would continue to expand, but analysts were less than impressed with revenue performance and US Bancorp cut the firm from a “strong buy” to a “market perform”.

Gainers included EMC Corp, which rose 11 cents to 12.37 after Goldman Sachs upgraded the data storage company’s stock rating to “outperform” from “in-line”.

Decliners outnumbered advancers almost 2 to 1 on the New York Stock Exchange. Volume was at 1.4 billion, about even with Tuesday’s trading.

The Russell 2000 index, which tracks smaller company stocks, closed down 6.05, or 1.1%, at 528.49.

Elsewhere, Japan’s Nikkei stock average finished 2.1% lower. In Europe, France’s CAC-40 dropped 0.5%, the FTSE 100 declined 1% and Germany’s DAX index fell 0.7%.