Jitters Knock the Dow Back Below 9,000

The Dow Jones industrial average slipped off the 9,000-point shelf Tuesday as investors, nervous about corporate earnings reports, took profits a day after the blue-chip stock index hit a new high.

Bonds and the dollar dropped, and sagging crude oil prices completed the general retreat.

The Dow, which Monday closed above 9,000 for the first time, fell 76.73 points to 8,956.50 after recovering from a deficit of nearly 140 points.

Broader stock indicators also suffered heavy losses, with the technology-heavy Nasdaq composite index falling 30.43 points to 1,798.71.

Even with the sharp declines and heavy volume, analysts said Tuesday’s downturn doesn’t necessarily signal the start of major correction.

“I think it’s premature to write off the rally. The key internal indicators are hanging in there,” said Gregory Nie, technical analyst at Everen Securities in Chicago. “In a perverse way, a dose of jitters would be good for a market that was developing a good case of complacency.”

On Monday, the world’s most closely watched stock index hit a record close of 9,033.23, spurred by news that Citicorp and Travelers Group would merge in the biggest corporate marriage ever.

“You have the earnings worry, and you have the pre-announcement [on earnings] from Motorola about the second quarter, so it’s probably good that the market takes a breather here,” said Joseph Battipaglia, chief investment officer at Gruntal & Co.

Motorola reported after Monday’s close that its first-quarter earnings fell significantly from a year ago. It also surprised investors by warning that the effects of weak Asian economies could hurt upcoming quarters more than previously thought. Its stock tumbled $6.38 to $53.50.

Companies begin reporting first-quarter earnings this week.

Declining issues outnumbered advancers by a 7-to-3 margin on the New York Stock Exchange in heavy trading.

The Standard & Poor’s 500-stock list fell 11.83 points to 1,109.55, and the NYSE composite index fell 5.42 points to 577.75, ending a four-session string of record highs.

The Russell 2,000 index of smaller companies fell 6.73 points to 475.15.

U.S. bonds also retreated, falling for a second day as investors sought more signs that the economy is losing steam, and turned their attention to $8 billion in bonds being sold by South Korea and Freddie Mac.

The benchmark 30-year Treasury bond fell, pushing up its yield to 5.84% from 5.82% on Monday.

Today, the U.S. government will sell 30-year inflation-indexed bonds.

Korea began selling $3 billion of five- and 10-year notes Tuesday in its first international debt sale. Freddie Mac sold $5 billion of 10-year notes, feeding demand for large offerings of easily tradable securities. Corporate and other debt is attractive to investors who don’t expect big gains in Treasuries without evidence growth is slowing enough to curb inflation.

Among Tuesday’s highlights:

* Financial stocks led the Dow’s decline after powering Monday’s advance: Travelers Group fell $4.63 to $68.38 and J.P. Morgan fell $4.69 to $139.94. Both stocks surged more than 10 points Monday amid news of Travelers’ deal with Citicorp, the biggest merger in history.

Citicorp, which is not a Dow component, retreated $15.38 to $165.13 after surging $37 on Monday.

* Among leading technology issues, Intel fell $1.25 to $72.63 and Microsoft fell $2.69 to $87.25. IBM fell $1.31 to $104.69, and Hewlett-Packard fell $1.13 to $60.75.

In currency markets, the dollar tumbled against the Japanese yen amid fresh signals that Japan’s government is moving closer to tax cuts and other measures to stimulate the country’s feeble economy.

In late New York trading, the dollar ended at 133.35 yen, down from 134.80 yen Monday.

Expectations for Japanese government moves on the economic front also pushed Tokyo’s 225-share Nikkei average higher. The index rose 1.74%.