The Dow Jones industrials edged lower Tuesday and the broader market was essentially flat, as investors looked to lock in gains from the previous session, when blue chip stocks rose to their highest levels in 18 months.
After the weekend, investors rushed to the market on encouraging economic data and solid news from retailers, and analysts said even some bargain-hunters who had been holding back were eager to get in on the action. Few were surprised by Tuesday’s trading.
“After a run-up like we saw Monday, it’s normal for people to say, ‘I don’t want to pay those prices, I’m going to pull back,”’ said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
The Dow Jones industrial average was down about 38 points in late-afternoon trading, while the broader market gauges were essentially flat.
The tech-loaded Nasdaq composite index was down around 8 points, while the Standard & Poor’s 500-stock index was some 3 points lower.
The market rallied Monday on a report showing better-than-expected growth in the nation’s manufacturing sector. Many analysts were optimistic that the gains would hold, noting that the end of the year is traditionally a time of strength for Wall Street.
“I don’t think investors are comfortable being on the sidelines at this point,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore. “For those people who were saying the market was due for a correction ... this is a real decision time.”
Still, some investors remain skeptical about the strength of the recovery, and may be inclined to guard their gains.
Viacom Inc. was up 20 cents at $39.77, following a report that it was nearing a decision to sell its majority interest in video-rental company Blockbuster Inc. UBS rated Viacom at a “buy” after The Wall Street Journal reported the company was poised to unload the unit after years of indecision. The video store chain was down 28 cents at $16.95.
AT&T Corp. was down 10 cents at $20.25 after Betsy Bernard stepped down as president to pursue other opportunities; the company named William J. Hannigan, chairman and chief executive of Sabre Holdings Corp., to succeed her.
PepsiCo Inc. was down 54 cents at $48.17 after announcing it would cut 750 jobs and close a Frito-Lay plant in Louisville, Ky., as part of a plan to streamline its operations. The snack food and beverage company reaffirmed its earnings outlook through the end of the year and forecast double-digit growth in earnings per share for 2004.
Vivendi Universal SA was down 11 cents at $23.21; the French media and telecommunications company reported third-quarter profits that beat expectations, but warned its end-of-year performance would not be as strong.
Texas Instruments Inc. was up 4 cents at $30.22 after selling its remaining stake in Micron Technology Inc. Gains related to the sale were expected to raise the Dallas chipmaker’s fourth-quarter net income by $125 million. Micron was down 21 cents at $12.84.
Advancers outnumbered decliners almost 3 to 2 on the New York Stock Exchange. Volume was at 873.99 million shares, compared with 845.56 million shares traded at the same point Monday.
The Russell 2000 index, which tracks smaller company stocks, was up 0.62, or 0.1 percent, at 555.21.
Overseas, Japan’s Nikkei stock average finished 0.1 percent higher Tuesday. In Europe, France’s CAC-40 lost 0.5 percent, Britain’s FTSE 100 closed down 0.7 percent and Germany’s DAX index declined 0.3 percent.