Stocks ended mixed in a low volume session. A second-tier economic report that showed a rise in personal income and consumption was not enough to keep blue-chip investors at the table, but the
added 2% to register its best April.
Dow Jones Industrial Average ducked below the flatline shortly after lunchtime and stayed there for the remaining part of the day. It closed down 75.08 points, or 0.7%, to 10734.97. The index is up 9% since the beginning of April. And it is trading up for the year and above the levels it hit on April 19, a day after the
Federal Reserve cut interest rates.
Capping off a month-long rally, the
Nasdaq Composite Index closed up 40.6 points, or 2%, to 2116.20 today. Since the beginning of April, the Comp has gained 276.1 points, or 15%. But even with today's gains, the tech measure is trading below 2182, a level hit one day after the rate cut.
Data released by the
this morning showed that
personal income and consumption were on the rise during March, further allaying fears about an economic slowdown. On the news, the Dow traded up as much as 80 points, while the Nasdaq was up over 90 points this morning.
Traders interviewed could not point to a single event for this afternoon's reversal on the industrials. "We've risen very far in the last few days, so it's time to take a breather," said Phil Ruffat, a trader at
. "But on a low-volume day, it's very dangerous to read too much into the tea leaves."
Volume was very low today, as Japanese markets are closed for the week and Europe prepares for the May Day holiday on Tuesday. In fact, several traders attributed the afternoon selloff in part to profit-taking after the close of the European bourses. "It's no coincidence that profits were taken as Europe went home," says Ruffat.
"We ran out of steam on a very quiet Monday," said a trader at a large Wall Street firm. "There was some month-end jockeying in mutual funds." (
mark-up process in a separate story.)
Leading the blue-chip index lower were shares of
J.P. Morgan Chase
, off 3.8% to $47.98,
, down 2.1% to $48.88,
, lower by 2.2% to $45.19, and
, behind by 2.1% to $51.74.
One session after the
GDP report showed the economy grew more strongly than expected in the first quarter, investors were happy to see additional signs of a rebound. As far as economic data go, the personal income and consumption numbers pack less of a punch than the GDP result. "But even though it doesn't contain a whole lot of surprises, today's report rounds out the monthly profile," said Josh Feinman, chief economist at
Deutsche Asset Management Americas
. "It underscores the pattern that consumer spending continues to rise."
Personal income increased $40.8 billion, or 0.5% in March, the government report showed. Personal consumption expenditures increased $18.6 billion, or 0.3%. Because consumer spending makes up two-thirds of economic activity, it is an important gauge for Wall Street economists. This morning's number reinforces the trend that Americans are spending more than they make.
As earnings season is winding down, there was no major corporate news driving the market today. But there were some interesting patterns taking shape on the market.
Once again today, investors were moving out of havens and into riskier positions. After months of steady declines in tech stocks, some investors have begun to believe that the worst is over. "With the hopes of better earnings numbers, technology stocks are leading the market higher," said Bob Basel, head of listed trading at
Salomon Smith Barney
. "But volume is moderate, so this is an illiquid rally."
Sectors out in front of today's tech gains included semiconductor and networking stocks. The
Philadelphia Stock Exchange Semiconductor Index
closed up 3.1%, with bellwether
ahead 2.4% to $30.91. The
American Stock Exchange Networking Index
ended higher by 3.4%, with
-- the second-most-active stock on the Nasdaq -- up 8.9% to $16.98.
fell 5.8% to $16.16, after the company said that it lacked a great deal of visibility about the remainder of 2001. At the
J.P. Morgan H&Q Technology Conference
, executive vice president George Roberts said, "Customers are not indicating that they'll spend more in the second half than the first half. Customers aren't telling us anything. They're saying 'this is what we're willing to spend now, and when we get to the next stage, we'll let you know.' "
Looking at other company names in the headlines,
-- the second-most-active stock on the Big Board -- fell 31% to $16.50 after the operator of discount stores said it would restate earnings because of accounting regularities. The changes will take 7 cents off the $1.81 the company has been earning in the past three years. "In the investigative process, the company and the audit committee are reviewing allegations of fraudulent behavior in connection with certain of the accounting irregularities and are reviewing the company's internal accounting controls and financial reporting processes," Dollar General said in a press release this morning. The company reiterated its full-year 2001 earnings of 71 cents to 73 cents a share, as well as same-store sales growth in April of 8% to 9%.
shed 8.7% to $32.19 after an article in the
New York Times
alleged a corporate misrepresentation of revenue and earnings. In a prepared statement responding to the article, the software firm defended its business and accounting practices, saying its new business model, which allows the company to account for revenues by short-term subscriptions instead of one-time license fees, "provides greater predictability and transparency of financial results."
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European stocks rose amid light trading ahead of Tuesday's May Day holiday. London's
closed up 15.5 to 5967 after making a brief stab at the 6000 level in early trading as investors remained upbeat following last week's strong U.S. economic data. Trading in Frankfurt was helped by gains in the technology sector, and the
index gained 82 to 6257. The
in Paris gained 64 to 5640.
Asian stocks also rode Friday's optimism in the U.S., ratcheting up gains despite holiday-thinned trading. With Japan and Hong Kong closed, some other key Asian markets finished higher ahead of the Labor Day holiday on Tuesday.
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