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Investors finished their holiday bargain hunting and settled into sell mode last week, serving the market its largest weekly decline since the free fall that followed the resumption of post-9/11 trading. The November rally that put the Dow back in 10,000 territory gave way to a sell-off, as investors took heed of warnings by analysts that the market has factored in an early 2002 recovery that is not a sure thing yet. Grim first-quarter forecasts from companies (including Lucent Corp., Bristol Myers-Squibb and Merck) and another wave of layoffs at American Express Co. helped drive that point home. Thirty-six AdMarket stocks were down for the week, 13 were up and AOL Time Warner was unchanged.

Agency stocks took the brunt of the downdraft, after the arrival of a grim set of third-quarter numbers (see below and related story on P. 4). Analysts have warned the recent rally in agency and media stocks had inflated prices for stocks of companies that remain very vulnerable to the economy and are not likely to see real improvement until late 2002.