The Dow fell back yesterday after profit warnings and a key stage in the Clinton scandal reminded investors that the ageing bull market still faced many hurdles. Profit-taking after the Dow notched up its biggest one-day points gain of 380 points on Tuesday was inevitable, analysts said.

"We are not in a stage where sharp rallies can be built on," said Mr Donald Selkin, chief market strategist at Joseph Gunnar & Co.

Disappointment with the lack of follow through to Tuesday's surge, profit warnings from Procter & Gamble and Merrrill Lynch & Co, and delivery of independent counsel, Mr Kenneth Starr's report on the White House scandal to Congress all conspired to rattle investors. As stocks fell, Treasuries soared on hopes that the US Federal Reserve will cut rates.