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US Treasury Sec. Sees Better Economy, But Stocks Drop Anyway

It's been another poor day's trading on Wall Street. Stocks fell across the board. Not even the traditional blue chips could avoid the downward trend.

The Dow Jones Industrial Average dropped 66 points, or .6 percent to 10,345.

The technology-driven Nasdaq lost 45 points, or just over 2 percent on the day to 1,918. The S&P 500 index was down to 1,177. That is a drop of .75 a percent.

Cisco, Dell, and Microsoft, were among the well-known technology companies posting losses on the day. In the case of Dell, shares fell following an analysis from Credit Suisse First Boston. The brokerage house says the company will see smaller than expected profits for the next two years.

Because of the continued slowdown in the economy, there is concern about the overall strength of the dollar. The dollar is still strong relative to other major currencies, but has lost ground in recent months, most notably against the euro.

The International Monetary Fund has raised concerns that the value of the dollar could begin to slide should the economy stay flat. But analysts point out that an anticipated cut in interest rates next week should give the currency a much-needed boost. Nevertheless, the dollar finished the day lower against the euro and the yen.

For Treasury Secretary Paul O'Neill, although the economy continues to stagnate, things will begin to improve. "As we wring out the over-reached, what I would characterize as over-reached conditions of, say, 1998, 1999, and maybe even part of the year 2000, and we get back to a more sustainable bottom, then you will begin to see a rekindling of business investment. So far this is not a consumer-led contraction, this is a business/investment-led contraction and it's working its way through the system."

One positive sign for the economy is that inventory figures dropped last month. That means there is less overall surplus and retailers are adjusting to the slowdown in sales. But it is clear the slowdown persists. Newly-released figures show industrial output or, in other words, demand, fell again in July. This is what President George Bush and Treasury Secretary O'Neill want to help remedy with the U.S. tax rebate. Most analysts agree that an improvement in those figures is likely next month.