Market Slips but Ends Week with Gains

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The bulls sat one out after whirling dervish-like through the heart of the week, and stocks staged a retreat that nevertheless left the week's upturn intact.

The broad

S&P 500

failed to enjoy a second straight record close, slipping 5.21 to 980.28. The blue-chip

Dow Jones Industrial Average

took a harder hit, losing 66.52 to 7906.50 as

J.P. Morgan

(JPM) - Get Report

,

International Paper

(IP) - Get Report

,

General Motors

(GM) - Get Report

and

Chevron

(CHV)

applied pressure. The tech-larded

Nasdaq Composite Index

edged down 0.13 to 1619.36 and the small-cap

Russell 2000

lost 1.94 to 430.05.

"I wasn't surprised," Jim Herrick, managing director of trading at

Robert W. Baird

in Milwaukee, said of the pullback. "I still think there are some concerns out there with the Iraq situation and what's going on in Washington. The only reprieve we've had is that the foreign markets have been closed, so the focus has not been on those markets." Many Asian bourses, including those in Hong Kong, Indonesia, Malaysia and Singapore, have been closed for much of the week for celebrations of the Lunar New Year and the end of Ramadan.

There were no exchange closings on these shores, and the index bias was to the upside. For the week, the Dow was up 205.76, or 2.7%; the S&P 500 was up 22.68, or 2.4%; the Nasdaq was up 43.43, or 2.8%; and the Russell 2000 was up 5.24, or 1.2%.

For the month -- and, of course, for the year thus far -- the Dow was down 1.75, or some infinitesimal percentage; the S&P 500 was up 9.85, or 1%; the Nasdaq was up 49.01, or 3.1%; and the Russell 2000 was down 6.97, or 1.6%.

Today's market internals were noncommittal, with volume down sharply from the lofty heights of midweek and breadth split almost precisely down the middle. On the

New York Stock Exchange

, 1,457 decliners nudged past 1,448 advancers on 613.4 million shares. New NYSE highs swamped new lows by 110 to 19. On the Nasdaq, 2,202 advancers outpaced 2,119 decliners on 736.6 million shares. New Nasdaq highs beat new lows by 100 to 67.

"I feel we were looking for a slowdown in earnings growth and now that we're experiencing a deceleration in earnings growth, a lot of people -- until this week -- had been worried about that," said John Lynch, director of investment strategy at

Interstate/Johnson Lane

in Charlotte, N.C. Good earnings reports this week from several prominent companies helped to push that worry -- as well as concerns about Iraq and the

Clinton

scandal -- offstage, Lynch said. But the respite may prove temporary, he added.

"The alarm I have is that we're still going to have these concerns once earnings season is over," Lynch said. "I think we'll still have good news on the economic front, but there's going to be a change of focus." That could shake the market out of its now-growing optimism and bring more volatility, but Lynch thinks the market will be able to ride it out. He sees the

Federal Reserve

easing short-term interest rates in several weeks and expects any military conflict with Iraq to end swiftly. He's looking for 8% S&P 500 earnings growth this year, at the high end of Wall Street expectations, and total equity returns of 10%.

The bond market improved today, shrugging off a strong fourth-quarter

gross domestic product

report as old news and warming to congressional testimony on the Asian crisis from

Treasury Secretary Robert Rubin

(click

here) and

Fed Chairman Alan Greenspan

(click

here). The benchmark 30-year Treasury bond rose 11/32 to 104 11/32 in price, the yield relaxing to 5.82%.

Friday's market action

(earnings estimates from

First Call

; new highs and lows on a closing basis unless otherwise specified):

ProSource

(PSDS)

exploded up 7 7/16, or 110.1%, to an all-time high of 14 1/4 after

AmeriServe Food Distribution

agreed to buy it for $141 million in cash and the refinancing of $175 million in debt. AmeriSource is a unit of privately held

Holberg Industries

.

Anadigics

(ANAD)

cratered 19 5/8, or 58.2%, to a 52-week low of 14 1/8 after late

yesterday warning of a possible first-quarter loss.

Goldman Sachs

downgraded the stock to market perform from the recommended list and

CIBC Oppenheimer

cut it to hold from strong buy.

CyberMedia

(CYBR) - Get Report

plummeted 2 19/32, or 27%, to an all-time low of 7 1/16 after late yesterday reporting fourth-quarter earnings of 1 cent per share. That was 18 cents below the four-analyst consensus estimate and in line with the year-ago figure.

Lehman Brothers

downgraded the stock to neutral from buy.

Award Software International

(AWRD)

shot up 1 3/4, or 22.6%, to 9 7/8 despite late yesterday reporting fourth-quarter earnings of 22 cents per share. That missed the three-analyst estimate by 3 cents but beat the year-ago 17 cents. The company also set a buyback of up to 700,000 shares.

The new

Mellon Bank

(MEL)

is

Oxford Health Plans

(OXHP)

, which soared 3 3/16, or 22.2%, to 17 1/2 on rumors that

Aetna

(AET)

is preparing a takeover bid for the much-maligned HMO company. Aetna was down 1 11/16 to 73 1/2. Both companies reportedly declined to comment on the speculation.

Heartport

(HPRT)

sledded 3 11/16, or 21.8%, to an all-time low of 13 5/16 after late yesterday reporting a fourth-quarter loss of 48 cents per share. That was a penny better than the 13-analyst outlook but down from the year-ago loss of 45 cents.

Morgan Stanley Dean Witter

downgraded the stock to neutral from outperform and

Credit Suisse First Boston

lowered it to hold from strong buy.

Xylan

(XYLN)

popped up 2 1/4, or 13.9%, to 18 1/2 after late

yesterday reporting strong fourth-quarter earnings and setting a buyback.

X-Rite

(XRIT)

slumped 2 1/2, or 13.9%, to 15 1/2 after reporting fourth-quarter earnings of 21 cents per share. That missed the six-analyst forecast by 3 cents but edged past the year-ago 20 cents.

Organogenesis

(ORG) - Get Report

surged 2 5/8, or 13.5%, to 22 1/16 after a

Food and Drug Administration

panel recommended marketing approval of its skin-replacement product. The panel did the same for

Advanced Tissue Sciences

(ATIS) - Get Report

, which advanced 1/4 to 13 3/4.

TheStreet.com

looked at the recommendations in a

story today.

Closure Medical

(CLSR)

moved up 1 5/8 to 28 after an FDA panel recommended approval of its Dermabond wound glue.

VISX

(VISX)

gained 1 1/2 to 21 3/8 after the FDA approved the use of its excimer laser systems to treat myopia.

Western Digital

(WDC) - Get Report

rose 1 5/8, or 9.4%, to 18 7/8 after late

yesterday reporting a second-quarter profit instead of the expected loss. Elsewhere in the disk-drive industry,

Quantum

(QNTM)

rose 3 1/8, or 14.8%, to 24 3/8;

Seagate

(SEG)

rose 2 9/16, or 12.4%, to 23 3/16;

Hutchinson Technology

(HTCH)

rose 1 1/2 to 25 1/8; and

Read-Rite

(RDRT)

rose 11/16 to 14 13/16.

Vesta Insurance

(VTA) - Get Report

slid 7 3/8, or 11.6%, to 56 1/2 after late

yesterday reporting disappointing fourth-quarter earnings.

Merrill Lynch

cut the stock to near-term accumulate from buy, keeping a long-term buy.

Synopsys

(SNPS) - Get Report

gave up 3 1/16, or 9%, to 30 15/16 after late

yesterday reporting first-quarter earnings in line with estimates.

Aflac

(AFL) - Get Report

climbed 4 7/16, or 8.9%, to 54 7/16 on the strong earnings it reported late

yesterday.

Cymer

(CYMI)

gained 1 1/4, or 8.2%, to 16 9/16 despite late

yesterday warning of weak first-quarter earnings. Morgan Stanley Dean Witter upgraded the stock to outperform from neutral, calling any near-term weakness a buying opportunity.

Sapient

(SAPE)

was up 5 1/2 to an all-time high of 75 1/2 after late

yesterday reporting solid fourth-quarter earnings and setting a stock split.

Ryland Group

(RYL)

increased 1 7/16 to 24 3/8 after

Prudential Securities

upgraded it to buy from hold.

Money Store

(MON)

ascended 1 5/16 to 19 5/16 on a positive mention in

Business Week

and an upgrade to near-term buy from accumulate at Merrill Lynch. Merrill maintained a long-term buy.

Ralston Purina

(RAL)

jumped 4 7/8 to 93 7/8 after late

yesterday reporting strong first-quarter earnings. Merrill Lynch upped the stock to near-term buy from accumulate, maintaining a long-term buy.

Kellogg

(K) - Get Report

surrendered 2 3/8 to 46 3/8 after reporting fourth-quarter earnings of 39 cents per share, a penny short of the 14-analyst view and in line with the year-ago figure.

Reuters

(RTRSY)

fell 4 3/8 to a two-year low of 53 5/8 as reaction continued to a grand-jury probe of alleged data misappropriation by its

Reuters Analytics

unit.

Bear Stearns

downgraded the stock to neutral from buy.

Drilling and oil-service shares remained volatile, skidding today.

Transocean Offshore

(RIG) - Get Report

lost 2 1/2 to 39 3/4,

Halliburton

(HAL) - Get Report

lost 2 5/16 to 44 15/16,

National-Oilwell

(NOI)

lost 1 5/16 to 26 1/2,

Western Atlas

(WAI)

lost 1 15/16 to 62 5/16 and

Falcon Drilling

(FLC) - Get Report

lost 1 1/4 to 30 3/8.

Sequent

(SQNT)

rose 1 3/16 to 17 7/8 after

Salomon Smith Barney

upgraded it to outperform from neutral.

Lands' End

(LE) - Get Report

improved 1 7/16 to an all-time high of 39 5/16 after setting a buyback of up to 2 million shares. The company said it has purchased about 1.1 million shares of the 1.5 million authorized in January 1997.

Lernout & Hauspie

(LHSPF)

added 2 1/2 to 58 7/8 on news of its plan to offer an Internet search and translation service starting in the third quarter.

First Data

(FDC) - Get Report

tacked on 1 5/16 to 30 5/8 after Prudential Securities upgraded it to buy from hold.