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Stocks struggle in first session of 2004

After bidding stocks higher in the first session of the new year, investors changed course and took some profits. Light volume exaggerated price moves.
/ Source: The Associated Press

Wall Street began the new year Friday with the same enthusiasm but also prudence that marked its big comeback in 2003 — after bidding stocks higher sharply, investors changed course and took some profits in blue chips, leaving prices mixed.

Light volume exaggerated Friday’s price moves, but the major indexes eked out gains for the week.

Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, warned against reading too much into the results.

“The volume is very light,” he said. “I’d wait to see what the trading is like next week, when everyone is back.”

The Dow Jones industrial average ended down 44.07, or 0.4 percent, at 10,409.85 Friday but up 0.8 percent for the week. Earlier in the day, after a stronger-than-expected report on manufacturing, the Dow was up more than 74 points.

Broader stock indicators were mixed. The Standard & Poor’s 500 index dropped 3.52, or 0.3 percent, to 1,108.40, but was up 1.1 percent for the week. The Nasdaq composite index rose 3.31, or 0.17 percent, to 2006.68 and was up 1.7 percent for the week.

Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif., said the meandering market was a reflection of the low volume.

“On days like that, we sometimes see dramatic moves when buy or sell programs kick in,” he said.

Still, Lydon said investors have good reason to be optimistic about the new year: It’s an election year, interest rates remain at 40-year lows and corporations chastised for bad practices have reformed.

“The market is starting to be fun again, but not yet to the point where cab driver are giving you investment tips,” he said.

For all of 2003, the Dow gained 25.3 percent, the Nasdaq surged 50 percent and the S&P 500 gained 26.4 percent. The markets were closed Thursday for New Year’s.

The market initially rallied Friday after the Institute for Supply Management said its manufacturing index rose to 66.2 in December from 62.8 in November. Most analysts had expected the index to dip.

Norbert J. Ore, chairman of the institute’s business survey committee, said the reading meant “the manufacturing sector enjoyed its best month since December 1983.”

He said much of the momentum was in orders, which bodes well for economic growth in 2004.

Tim Connors, the chief investment officer for value equities at Delaware Investments in Philadelphia, said investors “are positive about the direction of the economy.”

He predicted Wall Street would have “a pretty good year, though certainly not the magnitude we saw last year,” with big companies leading the market in 2004.

Big movers on Wall Street included a pair of rival drug wholesalers. Both took a beating after one took a government contract from the other at a price analysts considered too high.

AmerisourceBergen Corp. shares continued to slide after the Chesterbrook, Pa., drug wholesaler announced Wednesday it lost its Department of Veterans Affairs prime pharmaceutical-vendor contract. The contract, awarded to McKesson Corp. of San Francisco, was valued at about $3 billion annually.

AmerisourceBergen lowered its earnings forecast, and analysts downgraded the stock Friday. Several also lowered McKesson, worried that it had traded revenue for volume. AmerisourceBergen shares were down $2.15, or nearly 4 percent, at $54.00. Shares of McKesson fell $1.30, or more than 4 percent, to $30.86.

Advancing shares were just slightly ahead of decliners on the New York Stock Exchange, with volume a light 1.14 billion shares.

The Russell 2000 index of smaller companies was up 3.94, or 0.7 percent, at 560.85.

Overseas, Japan’s markets were closed for the New Year’s holiday. Britain’s FTSE 100 closed up 0.74 percent, German’s DAX index rose 1.35 percent, and France’s CAC-40 gained 1.09 percent.