Profit-Taking Sends Stocks Down

A strong report on manufacturing, lower oil prices, a stronger U.S. dollar and positive news from a key retailer were not enough to move stocks higher today as a sell-off described as profit-taking from the gains made late in 2004 drove shares lower.

The Dow finished at 10,729.43, down 53.58, or 0.50 percent on the session. The Nasdaq gave up 23.29 points, or 1.07 percent, to close at 2,152.15 and the S&P 500 was down 9.84 points, or 0.81 percent, to 1,202.08.

Positive News Ignored

Investors might have been reaping gains made in the end-of-the-year run-up on Wall Street that pushed major markets to their best year-end close since 2001.

To do so, they largely set aside a host of positive news, including a report from Wal-Mart that December sales were up 3 percent over the year before thanks largely to a strong post-Christmas shopping week. That is at the top end of earlier forecasts and would mark the best one-month gain since July.

Positive economic news was turned in today in the form of the Institute for Supply Management report on factory activity, which moved to its highest level since August, rising to 58.6 from 57.8 in November.

Oil, Dollar Pitch In

Oil prices retreated as well, as the prospects of a prolonged stretch of warmer-than-average weather across much of the U.S. prompted a sell-off. Crude futures trading in New York were down US$1.33 per barrel on the session to $42.12 after being down more than $2 in earlier trading.

Even the U.S. dollar, which had been a cause of concern for many investors despite the year-end boost for stocks, turned in a strong performance. The dollar rallied against both the euro and yen

Investors will be watching for more key economic news this week that will round out the picture of the economy as the calendar turns the page to 2005, with the December employment report due on Friday likely to receive plenty of attention.

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