Street’s 7,000 Week Has Bad End

Stock investors took some of their profits home for the long Presidents Day weekend Friday, following a three-day rally that saw the Dow Jones industrial average rise more than 200 points and surpass 7,000.

The market was mostly lower despite news of declining wholesale prices that on most days would bring out the buyers.

The 30 industrials of the Dow closed down 33.48 points at 6,988.96. That followed a more than 60-point climb on Thursday that pushed the index to 7,022.44. For the week, the Dow rose 133.16 points.

New York Stock Exchange volume totaled 480.14 million shares as of 4 p.m., down from Thursday’s brisk 584.39 million.

Broader market indexes were also lower, but on the NYSE the number of advancing issues still beat decliners by a 10-to-9 margin.

The NYSE composite index fell 0.94 to 423.48. The Standard & Poor’s 500-stock index lost 3.37 to 808.45. Both had set records Thursday.

The Nasdaq composite index fell 3.62 to 1,367.19, weighed down by falling computer shares. The American Stock Exchange market value index lost 1.25 to 594.15.

“Two hundred points up is enough to expect some kind of profit-taking,” said Ricky Harrington, stock analyst at Interstate/Johnson Lane in Charlotte, N.C.

Nonetheless, Harrington said the declines were a little bit surprising considering the morning’s economic reports from Washington.

The Labor Department said that producer prices fell 0.3 percent in January. The market was expecting a 0.2 percent rise. The decrease was led by heating oil, meat and cars.

In addition, the Commerce Department said industrial production was unchanged in January. That was in line with analyst expectations. And the percentage of factories in operation fell a slight 0.2 point to 83.3 percent, also in line with expectations. These numbers indicate that there’s room for higher production without the shortages of goods and labor that can bring on inflation.

“The best time to sell is in the face of extremely good news,” explained Richard Cripps, chief market strategist for Legg Mason in Baltimore. “The markets are very liquid and you can get a good price.”

In addition, analysts said investors often lighten up their portfolios going into a long holiday weekend to avoid excess exposure in case of unexpected events.

The Dow’s move above 7,000 marked its fastest 1,000-point advance ever, as the same factors that have kept stocks rising for six years continued to spur optimism. Moderate economic growth, strong corporate profit gains, a lack of inflation and the steady flow of money into mutual funds show little signs of letting up.

Nonetheless, some analysts are predicting that inflation will begin to appear later in the year, prompting the Federal Reserve to raise interest rates to slow down economic growth. Higher rates increase corporate borrowing costs, cut consumer spending and usually result in lower profits.