Blue Chips Edge Lower on Light Profit-Taking

Stocks edged lower Monday as investors paused in a two-week buying spree that has boosted some indexes to new highs and put the Dow Jones industrial average on the verge of its first record in six months. Bond yields rose.

Oil prices fell as traders monitored developments in the Iraqi crisis.

The Dow declined 8.97 points to close at 8,180.52 after an early rally to 8,216.65 fell short of the Aug. 6 record close of 8,259.31. Last week, the Dow jumped 283 points, or 3.6%.

“There’s been a little bit of profit-taking after a very, very strong week,” said Robert von Pentz, a managing partner at Columbia Partners. “But the underlying tone seems to be reasonably healthy.”

With no economic data or major new developments in Asia, Iraq or Washington to contend with, investors had little reason to act Monday, traders said.

A weak Treasury market also dampened buyers’ enthusiasm. The price of the 30-year Treasury bond fell, which raised the yield to 5.94% from Friday’s 5.91%.

With the Dow within striking distance of its all-time high, some analysts suggested the blue-chip rally was losing steam. They said a slowdown in corporate earnings in the coming months could put a ceiling on Wall Street’s climb.

“Many of these stocks are starting to nudge up against old resistance levels, and upside momentum may be lacking here,” said A.C. Moore, chief investment strategist at Principal Financial Securities.

Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume totaled 542.54 million, the lowest tally since the first trading day of the new year.

The Standard & Poor’s 500-stock index fell 1.72 points to 1,010.74, and the NYSE composite fell 0.34 point to 525.97.

By contrast, the Russell 2,000 index of smaller companies rose 1.78 points to 447.28. But the Nasdaq composite index, which surged 8.5% over the prior nine sessions, fell 3.92 points to 1,690.43.

Among Monday’s highlights:

* The Dow’s decline came despite sizable gains from General Motors, which rose $2.38 to close at $62.94 after the auto maker announced plans to buy back up to 10% of its stock, and from Goodyear Tire & Rubber, which rose $1.69 to $65.25 in advance of its latest profit report.

* A number of leading technology names gave back a small portion of their recent gains: Intel fell $1.73 to $85.81; Cisco Systems sank $1.94 to $64; Sun Microsystems lost $1.63 to $45.88; and Microsoft was down 94 cents at $157.19.

Meanwhile, Applied Materials fell $1.25 to $34.75 a day before reporting quarterly earnings.

But Oracle rose for a second day, gaining 69 cents to $27.69 on optimism that its sales will increase this quarter, and America Online rose $11.94 to $110.44 after announcing it was raising the price for unlimited use of its service.

In currency trading, the dollar fell to 124.04 Japanese yen from 124.15 yen late Friday.

In commodity markets, crude oil prices fell amid continuing uncertainty about a possible U.S. military strike against Iraq. At the New York Mercantile Exchange, crude oil for March delivery eased 7 cents a barrel to $16.63.

Overseas, Britain’s FTSE-100 index closed down 0.51%. In Tokyo, the Nikkei-225 closed up 0.97%.

Market Roundup, D12