Wall Street falls in profit taking

Wall Street stalled today in quiet trading as investors booked profits from the market’s New Year rally and searched for new reasons to buy. Prices closed narrowly mixed, with tech stocks showing the biggest gains.

Some selling had been expected following the big advance a day earlier, and analysts said the absence of vigorous buying did not mean stock prices, which have been gradually moving higher since late 2003, were losing momentum.

“What you’re seeing is a slight pause in what is still an upwardly biased market,” said Brian Bush, director of equity research at Stephens Inc. “And I expect to see more upside.”

The Dow Jones industrial average closed down 5.41 at 10,538.66, according to preliminary calculations, maintaining nearly all of the 134-point surge on Monday that led it to its highest close since March 2002.

The market’s broader indicators were higher. The Nasdaq composite index closed up 10.01, or 0.5 percent, at 2,057.37. The advance added to the 2 percent gain on Monday, and was the index’s highest close since January 4, 2002.

The Standard & Poor’s 500 index rose 1.45 to 1,123.67.

The market shrugged off a Commerce Department report of a 1.4 percent decline in November in orders to US factories. It was the biggest setback for orders in seven months, but analysts discounted the numbers as a blip in a generally improving economic outlook.

Brian Williamson, an equity trader at The Boston Company Asset Management, said investors are now focused on the future, and identifying the next catalysts for a rally. He said Wall Street would be closely watching new job data and retail sales figures expected later this week. After that, the attention is likely to be on how many companies warn of earnings disappointments or revise fourth-quarter forecasts upward ahead of actual reports later this month.

“We need to see more positive stories from companies, we need to see the shape of the economy improving,” Williamson said. “In order to keep this going, we’re going to need good jobs numbers, good figures from retailers and good earnings.”

Also today the dollar sank to a new low against the euro and was lower against most other key currencies in European trading. The weakening dollar is another potential pressure, because it makes investing in US stocks less attractive to foreign investors who stand to lose money if the dollar further depreciates.

“At some point, the decline in the dollar will become problematic for the overall economy and the market. I don’t think we are to those levels yet, though,” said Bush.

Advancing issues narrowly led decliners on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index of smaller companies was up 0.97, or 0.2 percent, at 569.89.