US investors lock in profits, sending stocks lower

US investors today used the latest round of disappointing economic data as an excuse to gather profits and send stocks lower.

Before trading opened, the Commerce Department reported a 0.3% dip in retail sales for January due to a sharp drop in car sales – although without those sales, the retail figure would be up 0.9% for the month. Economists had been expecting a flat performance.

First-time unemployment claims for the first full week of February were at 363,000, more than the 345,000 expected by Wall Street and 6,000 higher than the previous week.

“What we’re seeing is a little profit-taking after what was a favourable response to the comments the Fed (chairman Alan Greenspan) made,” said Stuart Freeman, chief equity strategist for AG Edwards & Sons. “Some of the stocks that moved aggressively Wednesday were very cyclical companies, and now you’re seeing rotation back into more defensive positions.”

The Dow Jones industrial average fell 43.63, or 0.4%, to 10,694.07, a day after the Dow gained 123 points on Greenspan’s economic report.

Broader stock indicators were also lower. The Standard & Poor’s 500 index was down 5.65, or 0.5%, at 1,152.11, and the Nasdaq composite index slid 16.06, or 0.8%, to 2,073.60.

Greenspan spent a second day on Capitol Hill today, this time before a Senate committee. He continued the themes from Wednesday’s House testimony - better-than-expected gross domestic product growth, a lowered inflation estimate for the year and a warning against mounting federal budget deficits. His outlook sent stocks sharply higher on Wednesday.

Investors were also continuing to weigh Comcast Corp.’s hostile takeover bid for The Walt Disney Co. Comcast was down 1.17 at 30.06, while Disney gained 40 cents to 28.00.

“Speaking broadly, more mergers can be a comforting indicator from an investor’s perspective,” said Jack Caffrey, equities strategist at JP Morgan Private Bank. “It shows that companies are comfortable with their own operations, their own management and their own finances.”

Trading of ImClone Systems Inc was halted on the Nasdaq Stock Market this afternoon just before the Food and Drug Administration approved the company’s colon cancer drug, Erbitux. The last ImClone trade before the halt was at 34.00, down 9.10, after the stock had been trading narrowly between 42 and 44 for most of the day.

The halt, issued due to the pending news, was extended to the close of trade.

Erbitux was initially turned down by the FDA in 2001, which prompted a stock trading scandal that led to a conviction against company co-founder Sam Waksal and federal charges against Martha Stewart.

Bristol-Myers Squibb, ImClone’s distribution partner for Erbitux, fell 14 cents to 29.89.

Prescription benefit manager Medco Health Solutions Inc, a former Merck & Co. subsidiary, fell 1.94 to 36.05 despite beating analysts’ fourth-quarter earnings estimates by 2 cents per share.

Health insurer Aetna climbed 3.20 to 74.80, its highest level in 4,5 years, after doubling its fourth-quarter profit from a year ago and boosting its 2004 outlook.

AT&T Wireless Services rose 17 cents to 11.67 as takeover rumours continued to swirl, with Vodafone and Cingular Wireless considered the two top candidates to buy the company.

Declining issues outnumbered advancers 5 to 3 on the New York Stock Exchange, where volume totalled 1.46 billion shares, compared with 1.70 billion on Wednesday.

The Russell 2000 index of smaller companies was down 4.32, or 0.7%, at 592.75.