Indexes End Lower in Shortened Session

Major stock indexes finished lower in a quiet, abbreviated session Wednesday as traders went half-heartedly about their work during a day dominated by painful memories of last year’s terrorist attacks.

“Today is a day of reflection,” said Alan Ackerman, a market strategist at Fahnestock & Co. “People don’t feel concerned about the market, but about the turmoil and tragedy we experienced a year ago.”

An early rally that saw the Dow Jones industrials jump almost 125 points faded as the day wore on. A late burst of selling, sparked in part by news reports of an incident aboard a Dallas-bound airliner, pushed the major indexes into negative territory for the day.

Also casting a pall on the market was one more reminder of the soft economic recovery. U.S. economic growth slowed in recent weeks, although activity varied widely by sector, the Federal Reserve reported in its beige book.

The Dow ended down 21.44 points, or 0.3%, at 8,581.17. The Standard & Poor’s 500 index slipped 0.13 of a point, or less than 0.1%, to 909.45. The Nasdaq composite index shed 4.64 points, or 0.4%, to 1,315.45.

While the major barometers ticked lower, the overall market was mixed. Winners outnumbered losers by 9 to 7 on the New York Stock Exchange, and were about even on Nasdaq. Volume was very light. Both the NYSE and the Nasdaq Stock Market delayed the opening of trading to mark the anniversary of the Sept. 11 attacks.

There is hope that the market will advance now that the anniversary has passed, but some strategists see little scope for a significant run-up.

“I don’t see a wall of money coming in.... The market needs to be cheaper before people will come in and buy stocks aggressively,” said Michael O’Sullivan, a pan-European equities strategist at Commerzbank.

Another factor likely to limit the upside in the short term is President Bush’s speech to the United Nations today, when he is expected to attempt to drum up support for an attack on Iraq. Also, Fed Chairman Alan Greenspan’s testimony on the U.S. economy before the House Budget Committee today will be scrutinized.

In other trading Wednesday, gold prices dipped while Treasury yields rose for the third day in four. The yield on the benchmark 10-year Treasury note rose to 4.06% from Tuesday’s close of 4.00%.

After opening strongly, the dollar closed slightly higher against the yen and was unchanged against the euro. Bond and currency trading ended early. Oil rose 4 cents to $29.77 a barrel in New York trading.

Among the day’s other highlights:

* European stocks rallied, helped by Wall Street’s strong opening. Key indexes rose 3% in France, 0.8% in Britain and 2.6% in Germany. Stocks rose for a third straight session in Japan, where the Nikkei average gained 1%.

* Airline stocks eked out gains after rising most of the session, in contrast to the battering they received when the markets reopened after the attacks a year ago. The S&P; index of airline stocks edged up 0.1%, reflecting gains in Delta Air Lines, up 14 cents at $17, and American Airlines parent AMR, which rose 8 cents to $9.25.

* Conglomerate Honeywell International ended down $1.68 to $28.52 as investors worried about the company’s liability for asbestos claims in a trial in Illinois in which plaintiffs are seeking about $100 million in damages.

* Topping Nasdaq’s list of most active stocks, Cisco Systems added 14 cents to $13.57. Microsoft lost $1.21 at $48.58.

* Financials finished lower. Citigroup lost 73 cents to $30.14 and American Express fell 21 cents to $34.79, both weighing on the Dow.

* Local telephone companies gained as some investors said their declines this year and dividend yields make them attractive in a bear market. Verizon Communications, which has a dividend yield of 4.9%, rose $1.23 to $31.77. SBC Communications, which yields 4.2%, advanced 97 cents to $25.85.

* Comverse Technology fell 36 cents at $7.93. The communications software company posted a quarterly loss, excluding one-time items, and said it would post a wider-than-expected third-quarter loss due to the telecommunications slump.

* Technology consultant Inforte rose 33 cents to $6.95 after it raised its third-quarter revenue and earnings estimates after receiving new orders.