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Wednesday's Strong Trading Gives Wall Street a Boost - 2001-08-22

A strong afternoon's trading gave Wall Street a boost. There were no large gains overall, but each of the key indices managed to finish the day in positive territory. The Dow Jones Industrial Average regained Tuesday's losses as it rose one percent, 102 points, to 10,276. The technology driven NASDAQ composite gained 28 points to 1,860. That is a gain of 1.5 percent. And the broad S&P 500 index climbed eight points to close at 1,165.

Much of the credit for the gains made on the Dow goes to General Motors, the largest U.S. car manufacturer. The company now says it will match its own expectations for third quarter earnings. The numbers will surpass what market analysts expected and GM also says auto production will rise over the rest of the year.

The technology leader, Intel, is preparing to slash prices on some of its high-end computer chips. The company is engaged in the early stages of a price war with rival Advanced Micro Devices. Intel is set to release the newest versions of its Pentium Four chip next week, and shares in the company rose throughout the day's trading.

Confirming reports made earlier in the week, AOL TimeWarner has announced it will reduce its workforce by 1,200. The company says it has to consolidate jobs, as its merger continues. Tom Wolstein of Sanford C. Bernstein says these cuts are no surprise

"This is part of the ongoing process that we expected with the merger, as they continue to tighten up the entire operation," he said. "So it's not at all unexpected that they have to do this to get the synergies out of the company. They've acquired about a couple of dozen smaller online operations over the last few years. This is a consolidation of those operations. Putting all their software under one unit, it's just good management. They've got to do it."

There are new difficulties in the pharmaceutical sector, as industry leader Merck saw its share prices drop. The loss followed the release of a report linking one of Merck's arthritis drugs with an increased risk of heart attacks. Shares in Pharmacia fell as well, as one of their products was also cited in the report.

And one day after the U.S. Central Bank lowered interest rates, the dollar held up against other major currencies. It gained some ground against the yen and was largely unchanged against the Euro and the British pound.