Mild profit-taking sends Dow down late in the day

An across-the-board surge in technology stocks could not prevent a modest sell-off among large old-line stocks on Wall Street yesterday.

The Dow Jones industrial average was unable to build on two days of stunning gains, and fell into negative territory in late trading, closing down 35.37, or 0.3 per cent, at 10,595.23. But it still ended the week with a gain of 666.41 points, a 6.7 per cent surge. Market analysts said mild profit-taking in the wake of Thursday's record-setting 499.19-point gain sent the benchmark index down late in the day.

The Dow's bold advance during the previous two days, which included a 320-point surge on Wednesday, was a stunning reversal of fortunes. In those two days, the Dow stocks wiped out more than 40 per cent of their losses over the last two months.

"We saw some profit-taking in some selective areas, specifically the drug sector. But it wasn't a wholesale sell-off," said Mr Paul McEnroe, a trader at Brown Brothers Harriman in New York.

"At this point, judging from the recent market volatility, it's anybody's guess where we go from here," Mr McEnroe added.

Broader stock indicators were higher.

The Nasdaq composite index closed up 80.74, or 1.7 per cent, at 4,798.13. The Standard and Poor's 500 index was up 6.00 at 1,464.47.

Declining issues outnumbered advancers by an eight-to-seven margin on the New York Stock Exchange, with 1,591 down, 1,430 up and 467 unchanged.

NYSE volume totalled 1.29 billion shares, against a record 1.48 billion on Thursday.

The Russell 2000 index of smaller companies rose 0.54 to 574.78.

Technology stocks were higher on both the Nasdaq and the New York Stock Exchange.

New inflationary pressure was also a consideration. Consumer prices rose 0.5 per cent in February, the biggest jump in 10 months, led by a record increase in fuel oil prices and sharply higher gasoline costs, the Labor Department reported. But excluding the volatile energy and food categories, the "core" inflation rate was a moderate 0.2 per cent higher.

The figures appeared to cheer markets because they showed no signs of a steep resurgence in inflation, something that would lead the Federal Reserve to push up interest rates sharply. The Fed, however, is widely expected to raise rates one-quarter point at a meeting next Tuesday, marking a fifth increase since June.