Stocks Ease After Friday’s Big Gains

The stock market posted modest losses Monday after Friday’s big rally, as trading volume slowed to a crawl.

In commodity trading, natural gas prices plunged to 18-month lows amid an expected drop in demand from electricity generators this week.

On Wall Street the Dow industrials eased 40.82 points, or 0.4%, to 10,382.35 while the Nasdaq composite slipped 4.39 points, or 0.2%, to 1,912.41.

On Friday the Dow soared 194.02 points and Nasdaq jumped 73.83 points after Cisco Systems said its sales so far this quarter are meeting expectations. The report raised fresh hopes that the technology sector is bottoming.

But the bulls couldn’t keep the momentum going Monday. Losers outnumbered winners by 17 to 13 on the New York Stock Exchange and by 20 to 16 on Nasdaq.

A weak report Monday on existing-home sales in July may have weighed on investor sentiment.

NYSE volume was anemic; it was the fourth-slowest full-day session this year.

“For the market to make a convincing case that we’ve ended the decline, it’s going to have to put together a few days in a row of advances or people are going to look upon up days as an isolated situation,” said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.

Still, some analysts argued that the lack of heavy profit taking Monday was a good sign.

“I would have thought that . . . we would have given back half of Friday’s gains, and we didn’t,” said Larry Wachtel, market analyst for Prudential Securities.

In the bond market, long-term yields were marginally higher.

Commodity trading was dominated by the action in natural gas prices. Near-term futures in New York fell 16.2 cents to $2.54 per million British thermal units, an 18-month low.

Traders said cooler weather in much of the country this week is expected to cut demand for electricity to run air conditioners. Many power plants use natural gas to generate electricity, so gas demand could slide.

Among Monday’s highlights:

* In the tech sector, Cisco slipped 24 cents to $18.01, Compaq lost 38 cents to $13.27 and Veritas Software was off 66 cents to $34.83.

But Microsoft added 26 cents to $62.31 and Intel was up 7 cents to $29.15.

In the telecom sector, Verizon Communications fell 76 cents to $51.35 while Sprint FON edged up 27 cents to $22.72.

* Energy stocks were mixed despite the plunge in natural gas prices. Enron gained $1.41 to $37.76 and El Paso rose 89 cents to $51.91, but Unocal lost 31 cents to $35.87 and Chevron fell 70 cents to $92.10.

* Blockbuster sank $1.60 to $20.35. The video chain’s growth may be threatened by a film-studio joint venture that would deliver movies over the Internet, Barron’s magazine said.

* The July home-sales report may have hurt online home-listing site Homestore.com, which tumbled $2.98 to $18.60.

* Bank and thrift stocks were weak. Comerica fell $1.15 to $61.01, FleetBoston lost 96 cents to $38.05 and City National eased 53 cents to $48.01.

* Some health-maintenance organization stocks resumed their recent rally. WellPoint Health gained $1.56 to $108.54 and Oxford Health was up 92 cents to $30.50. But Aetna fell $1.23 to $28.77.

In foreign trading, Japan’s Nikkei-225 index rose nearly 1%. Germany’s main index added 0.4%. The Mexican market slipped 0.3%.

Market Roundup, C11, C12