Stocks fell today as strong profit reports from banks and brokerages failed to impress investors who have driven the market to record highs in recent weeks.
The Dow Jones industrial average fell 22.16 points to close at 11,187.68. Broader stock indicators were also lower, as the Standard & Poor's 500-stock index fell 11.13 to 1407.65 and the Nasdaq composite fell 34.19 to 2830.29.
But with all three indexes within close range of the new records that each set on Friday, analysts said today's drop was merely the result of minor selling by investors hoping to lock in profits.
"We're holding at a very high level," said Ned Riley, chief investment officer at BankBoston. "Performance has been remarkable in recent weeks, and the market may now tread water for a while."
Dow component Citigroup issued a strong second-quarter earnings report, but after an initial rise, its stock fell prey to the broader market's doldrums.
Citigroup said it earned 70 cents a share in the second quarter, topping Wall Street's expectations by 5 cents a share. Its stock closed 3/16 higher, at 49-3/16.
Banker J.P. Morgan followed the trend of strong earnings, reporting second-quarter profit of $2.52 a share, surpassing analyst expectations of $2.24 a share. Morgan's stock rose 5/8, to 138.
Charles White, portfolio manager at Avatar Associates, said investors were expecting the banks' results to top the published estimates of Wall Street analysts, and were reluctant to bid the shares much higher.
"The market has anticipated much of this good news, and at this stage, we're really ripe for profit-taking," he said.
Airline stocks were mostly higher as Continental and Delta posted strong results. Continental rose 2 7/8, to 41-7/16, and Delta gained 3 1/8, to 62-3/16, helping the Dow Jones transportation index move higher.
The second-quarter earnings season so far has largely met Wall Street's high expectations. Companies in a wide range of sectors have beaten earnings estimates, while relatively few companies have disappointed analysts.
For much of today's session, traders braced for big earnings news released after the close of trading. Microsoft and Dow component IBM each beat analysts' expectations, but both gave up gains notched last week as investors anticipated the strong earnings. Microsoft fell 1-1/16, to 98 3/8, and IBM dropped 1 5/8, to 134 5/8.
Lucent Technologies fell 5/16, to 78 1/8 after one of its key executives, Carleton Fiorina, announced plans to leave the company to be president and chief executive at Hewlett-Packard. The move buoyed shares of the computer maker 2 1/4, to 116 1/4.
Traders said money managers have already poured so much cash into the market they may be cautious about any further investment.
Riley also said that while earnings reports dominate the market this week, analysts are looking ahead to Federal Reserve Chairman Alan Greenspan's Thursday testimony before the House Banking Committee. While economic barometers increasingly show the U.S. economy remains free of inflation, there is still concern that the Fed might push rates higher in the coming months.
Declining stocks outnumbered advancing ones by 13 to 9 on the New York Stock Exchange. Volume totaled 645 million shares, down from 714.2 million on Friday.
The NYSE composite index fell 4.55, to 658.57; the American Stock Exchange composite index fell 0.44, to 817.66; and the Russell 2000 index of smaller companies fell 3.89, to 461.37.