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US Stocks Drop Further Thursday - 2001-09-20


Nervous investors sold stocks for a fourth straight day on Wall Street Thursday. Even some hopeful remarks by Federal Reserve chairman Alan Greenspan about a rosier economic outlook in the longer-term failed to inspire investors, preoccupied with the short-term fallout of last week's terrorist attack.

The Dow Jones Industrial Average fell almost 383 points, 4.33 percent, to 8,376. The tech-weighted Nasdaq composite dropped another 3.75 percent. The broader Standard and Poor's 500 index was down 31 points, just over three percent.

Leading microchip equipment maker Applied Materials joined the growing list of companies warning of lower profits in the wake of the terror attack. Analysts say hopes for an earnings recovery in the fourth quarter, after several quarters of slower growth, are now dimming.

Many corporations have announced lay-offs. Economists fear job insecurity will dampen consumer spending, delaying even more a U.S. economic recovery.

The Dow Industrials are down 12.8 percent so far this week. The Nasdaq is more than 13 percent lower.

The trend on Wall Street is a lot of selling, relatively little buying. Mary Farrell, chief investment strategist for UBS Paine Webber, says investors want simple answers. But she says nothing is very clear about corporate America over the short-term after last week's attack.

"The problem is that the market triggers off corporate earnings, which trigger off the health of the U.S. economy," says Ms. Farrell. "And we truly don't know - this is unprecedented in scope and magnitude - we don't know what's going to happen in the near future. So that leaves investors with too much uncertainty to take conviction one way or another."

It looked for a time this week as if investors could find a bit of comfort in the telecom sector. Wireless equipment and services played a key role in communications during the early days of the crisis. But telecom stocks have given back everything they gained Monday and Tuesday.

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