Profit-taking ends strong week on Wall St

Investors taking profits after the week’s big advance sent many US stocks falling today, but the lack of a wholesale sell-off left many on Wall Street pleased with the market’s resiliency.

The Nasdaq composite index managed a small gain, and all three major indexes had their best week of 2005.

With few earnings reports and no new economic data to encourage buying, there was little impetus for investors to continue the week’s rally. The major indexes have all risen more than 3% since last Friday’s close, buoyed by positive economic data and falling oil prices.

Investors mostly were waiting for next Tuesday’s release of minutes from the Federal Reserve’s May 3 meeting. Wall Street is hoping for more clues on the state of inflation and economic growth.

“I think we’re just seeing a little bit profit taking after a nice run-up in the market,” said Joseph Keating, chief investment officer at AmSouth Asset Management. “I don’t think it’s anything more than that, at least for now.”

The Dow Jones industrial average fell 21.28, or 0.2%, to 10,471.91.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 1.80, or 0.15%, at 1,189.28, while the Nasdaq composite index gained 3.84, or 0.19%, to 2,046.42.

The bond market saw minimal losses, with the yield on the 10-year Treasury note climbing to 4.12% from 4.11% late on Thursday. The dollar fell against most major currencies, and gold prices also lost ground.

Crude oil futures vacillated most of the session and finished modestly lower. A barrel of light crude for June delivery was quoted at 46.80, down 12 cents, on the New York Mercantile Exchange.

Falling oil prices and benign reports on inflation helped boost the stock market to its best weekly showing of the year, spurred by 100-point gains on the Dow on Monday and Wednesday. For the week, the Dow gained 3.27%, the S&P climbed 3.05 and the Nasdaq jumped 3.52%.

“It’s definitely been a good run, and it’s good that you see the market today sitting back, digesting a bit relaxing,” said Jay Suskind, head trader at Ryan Beck & Co. “We haven’t had a huge bout of profit taking here, so maybe we’re building a base and maybe we can start trading in a higher range than we did in April.”

Comments by Federal Reserve Chairman Alan Greenspan on oil prices did little to move the markets. Greenspan said the economy was affected by last month’s surging oil prices, but that the effect would not be felt long-term.

America West Airlines rose 36 cents to 5.17 after it agreed to merge with bankrupt carrier US Airways. The combined airline will be the No 6 carrier in the US and will fly under the US Airways name. The move allows US Airways to emerge from bankruptcy, and the company has already attracted 1.5 billion in capital. Shares of US Airways, trading on the over-the-counter bulletin board, were down 23.4%, or 29 cents, at 95 cents per share after climbing sharply higher on Thursday.

General Motors climbed 23 cents to 32.98 after The New York Times reported the vehicle manufacturer planned to cut back on production and streamline its product offerings. Only Cadillac and Chevrolet will offer full lines of cars and trucks, with the company’s other brands focusing on different types of cars.

Gap’s quarterly profit fell 7% from a year ago as sales slumped, but the clothing chain’s earnings still beat analysts’ expectations by a penny per share. The company plans a number of summer promotions and products to revive sales. Gap fell 28 cents to 21.46.

Time Warner lost 14 cents to 17.61 after the media conglomerate announced it would begin paying a quarterly cash dividend of 5 cents per share starting in the third quarter.

Declining issues outnumbered advancers by about 4 to 3 on the New York Stock Exchange, where volume totalled 1.28 billion shares, compared with 1.37 billion on Thursday.

The Russell 2000 index of smaller companies was down 1.05, or 0.17%, at 609.41.