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September 14, 2009

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Stocks take breather after five-day rally

INVESTORS pulled money out of stocks after a five-day rally left the United States market at its highest levels in nearly a year.

Stocks slipped in quiet trading last Friday after the recent string of gains and a drop in oil prices. Crude slid 3.7 percent, which hurt some energy stocks like Exxon Mobil Corp. That overshadowed a rosier profit forecast from FedEx Corp and a government report on improving sales at wholesalers.

Even with the losses, stocks still logged big gains for the week.

The forecast from FedEx is important because its delivery business is seen as an indicator of how healthy the economy is. FedEx cited stronger international shipments and cost-cutting for the improvement. Investors track demand at industrial companies because rising orders would be one of the first signals that the economy is strengthening.

Separately, the US Commerce Department reported that sales at the wholesale level rose in July by the biggest amount in more than a year, though inventories fell for a record 11th straight month. The rise in sales could lead businesses to start adding back to inventories, which would be a good signal for the economy.

The gains in industrial stocks came at the expense of areas that have been leaders in the market's six-month rally such as technology and financial shares.

"The market always overshoots on either side. I think we're at the point in the move where we need to see the fundamentals catch up to support these levels," said Sean Simko, head of fixed income management at SEI Investments in Oaks, Pennsylvania. "In the short term, the market is going to take a little breather."

The Dow Jones industrial average fell 22.07, or 0.2 percent, to 9,605.41. The index closed last Thursday at its highest level since October.

The broader Standard & Poor's 500 index fell 1.41, or 0.1 percent, to 1,042.73, and the Nasdaq composite index fell 3.12, or 0.2 percent, to 2,080.9.

The eighth anniversary of the September 11, 2001, terror attacks brought reflection on Wall Street, serving as a reminder of how little progress the stock market has made since then because of the steep slide that began two years ago.

On September 10, 2001, the Dow ended at 9,605.51 - nearly identical to Friday's close of 9,605.41.

About four stocks rose for every three that fell on the New York Stock Exchange, where volume came to 1.3 billion shares, compared with 1.5 billion last Thursday.

For the week, the Dow rose 1.7 percent, the S&P 500 index added 2.6 percent, and the Nasdaq rose 3.1 percent.

Meanwhile, gold again rose above US$1,000 to its highest level since February.

The S&P 500 index is up 54.1 percent since hitting a 12-year low in March.


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