Stocks end mixed after large-cap selloff

NEW YORK – Wall Street ended mixed Tuesday, selling off large companies’ stocks but buying up those of smaller companies as investors cashed in gains from Monday’s big rally and poked around for new bargains.

It was a somewhat unusual day of trading – normally, the major stock indexes closely track one another, but Tuesday the Dow Jones industrials closed with a moderate loss while the Nasdaq composite index had a moderate gain. Given the market’s quick, sharp rebound from August’s credit market squeeze and stock selloff, it was to be expected that investors would pause to adjust their portfolios as the fourth quarter gets under way.

Wall Street was only slightly fazed by the National Association of Realtors’ report Tuesday that its seasonally adjusted index of pending sales for existing homes fell 6.5 percent in August from July and 21.5 percent from a year ago. The data suggests sales of existing homes will probably keep declining – bad news for the economy, but good news for those hoping for another interest rate cut.

After the Federal Reserve lowered rates Sept. 18, the stock market is hoping for a similar move again at the Fed’s Oct. 30-31 meeting. That optimism drove the Dow up nearly 192 points Monday to close at 14,087.55 – a new high and its first foray above the 14,000 level since mid-July, right before stocks plunged on worries related to subprime mortgages and overly leveraged debt.

“The economy is soft, you have this big run-up, and the fact is people are just taking some profit,” said Scott Fullman, director of investment strategy for I.A. Englander & Co. “There’s not a ton of news to trade on, and investors are also looking ahead to the unemployment report on Friday.”

The Dow fell as investors sold some of their large-cap stock holdings, which have recently performed well. Also, with commodities prices retreating and the dollar rebounding, big mining and oil companies – such as Dow component Exxon Mobil Corp. – may see dampened profits. Small-cap stocks rose, along with homebuilders, airlines and brokerages, as investors returned to companies that were unattractive during the summer’s tight credit environment and now appear cheap.

The Dow fell 40.24, or 0.29 percent, to 14,047.31.

The broader Standard & Poor’s 500 index fell 0.41, or 0.03 percent, to 1,546.63, while the tech-dominated Nasdaq rose 6.12, or 0.22 percent, to 2,747.11.

The Russell 2000 index of smaller companies rose 7.23, or 0.88 percent, to 831.97.

Advancing issues outnumbered decliners by about 9-to-7 on the New York Stock Exchange. Consolidated volume came to 3.11 billion shares, down from 3.26 billion shares Monday.

Government bond prices rose as the Dow fell. The 10-year Treasury note yield, which moves inversely to its price, fell to 4.53 percent from 4.56 percent late Monday.

The dollar rebounded from record lows versus the euro, and recovered some ground against the pound and Canadian dollar. Gold, which has recently hit multidecade highs, tumbled under pressure from the rising dollar; an ounce of gold fell $17.80 to $736.30 on the New York Mercantile Exchange.