October 26, 2003	Sunday	Sha’aban 29, 1424

NEW YORK, Oct 25: Stocks fell on Friday after a cautious outlook from Microsoft Corp., the world’s largest software maker, added fuel to investors’ concerns that the market’s heady advance this year has gone too far.

The Nasdaq, which has seen the biggest gains, suffered its second down week in a row, while the Dow and the S&P 500 snapped a three-week winning streak.

In a way, it’s starting to become more rational, said Robert Mikkelsen, managing director of institutional sales and trading at the Advest Group. The earnings are better than expected in general, and the expectations going forward are still good. But I think maybe the market in the short run got a little bit ahead of itself.

Since the rally began in March, the Nasdaq has risen about 47 per cent, while the Dow is up about 27 per cent and the Standard & Poor’s 500 is up about 29 per cent.

Friday marked the end of the busiest week of the third-quarter earnings season. Most companies so far have reported earnings in line with or better than expectations, but not strong enough to sustain the run-up in stock prices over the past seven months.

The blue-chip Dow Jones industrial average fell 30.67 points, or 0.32 per cent, to 9,582.46, according to the latest data. The technology-packed Nasdaq Composite Index skidded 19.92 points, or 1.06 per cent, to 1,865.59. The broad Standard & Poor’s 500 shed 4.86 points, or 0.47 per cent, to 1,028.91.

For the week, the Nasdaq dropped 2.5 per cent, while the Dow lost 1.4 per cent and the S&P 500 fell 1 per cent.

A lot of investors were expecting very solid numbers. They were extrapolating estimates and raising the bar too high for the fourth quarter, said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access.

Trading volume was active, with 1.43 billion shares changing hands on the New York Stock Exchange and 1.95 billion shares traded on the Nasdaq. Decliners outnumbered advancers by about 9 to 7 on the NYSE and 19 to 12 on the Nasdaq.

Leading the Dow lower was Microsoft, which tumbled $2.30, or about 8 per cent, to $26.61. The drop was its largest one-day percentage drop since Sept. 17, 2001, the day the markets reopened after the Sept. 11 attack on the World Trade Center. It was the most actively traded stock on the Nasdaq.

The company posted a rise in quarterly profit and increased its outlook for the current fiscal year, although within the range expected by Wall Street. Microsoft said concerns over the security of its software had cut into new contracts in the latest quarter.

Shares of Wal-Mart Stores Inc. also weighed on the Dow, a day after hundreds of workers at its stores across the country were arrested on immigration charges in an investigation into contractor cleaning crews. Wal-Mart fell 60 cents, or 1 per cent, to $58.11.

JDS Uniphase Corp. lost 18 cents, or 4.8 per cent, to $3.60. The fiber-optic components maker posted a quarterly net loss and lower sales and forecast weaker-than-expected sales in the current quarter.—Reuters