New York Wall Street took a respite Monday after two weeks of volatile trading, dipping lower as investors absorbed an unsurprising purchasing managers' report and awaited a Federal Reserve meeting on interest rates.
Analysts attributed the muted reaction to investors' acceptance that the economy will stay weak for a while, as well as their hesitance to make any big moves until more is known about the U.S. response to the Sept. 11 terrorist attacks.
The Dow Jones industrial average closed down 10.73 at 8,836.83, losing some ground from Friday's 166-point gain and the index's 611-point rebound last week.
Broader stock indicators also fell. The Standard & Poor's 500 index dropped 2.39 to 1,038.55, and the Nasdaq composite index lost 18.34, closing at 1,480.46.
"What the market is reacting to is a growing sense that this is going to be a long haul. The terrorism campaign will take a long time and our lives are going to be altered to a great degree and not in a way that is bullish," said Charles Pradilla, chief investment strategist at SG Cowen Securities.
Investors showed little concern at new National Association of Purchasing Management data that indicated manufacturing activity continues to suffer.
Although the NAPM found that the manufacturing sector contracted in September for the 14th consecutive month, the results were slightly better than expected. The NAPM index reading of 47 was above the 45 most analysts had predicted, but it still fell below 50 _ the level considered an indication that manufacturing activity is shrinking, rather than growing.
"If economic data is more or less in the consensus, as this was, it's not going to affect the market significantly," Pradilla, the SG Cowen strategist, said.
Tech stocks recorded the most notable losses Monday, reflecting investors' ongoing doubts that the already fragile sector will recover anytime soon. Hewlett-Packard fell 45 cents to $15.60, while Intel dropped 38 cents to $20.01.
After the market's regular session, Compaq Computer warned its third-quarter results would be lower than expected because of the deteriorating economy. The stock fell 8 cents in extended hours after closing at $8.33, up 2 cents, in regular trading.
Blue chips closed more mixed. ExxonMobil declined 31 cents to $39.09, while manufacturer 3M dropped $1.54 to $96.86. But financial stocks fared better, including Citigroup, which rose $1.25 to $41.75.
Some losses had been expected given how turbulent trading has been in recent weeks. Stocks dropped precipitously when trading resumed after the attacks, but even before then, the market was losing ground on worries that a business turnaround might not occur before 2002.
Although stocks rebounded last week, they were expected to continue to be weak as investors took profits and shied away from any big commitments. Third-quarter earnings reports, due out this month, are expected to add to the volatility.
Even the possibility of the ninth interest rate cut of the year at Tuesday's Federal Reserve meeting is expected to do little to cheer Wall Street. Instead, investors are more likely to focus on what the Fed says about the economy's current health and future prospects.
Also Monday, the Commerce Department reported consumer spending increased by 0.2 percent in August, slightly below analyst expectations. The data predates the terrorist attacks, but is still viewed as a harbinger of what might come in the months ahead. Consumer spending accounts for two-thirds of the economy and many fear that consumers, scared by the attacks and worried about the future, will spend less.
"Obviously you'd expect to see spending taper off dramatically following Sept. 11," said Todd Clark, co-head of trading at WR Hambrecht. "This is going to make people think the trends are already worse."
Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume came to a relatively quiet 1.12 billion shares, compared with 1.64 billion Friday.
The Russell 2000 index fell 7.27 to 397.60.
Overseas, Japan's Nikkei stock average gained 2.0 percent. Stocks were weaker in Europe. Germany's DAX index lost 1.6 percent, the Britain's FT-SE 100 dropped 2.4 percent, and France's CAC-40 fell 1.8 percent.