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Wall Street Drifts Higher Tuesday - 2001-09-25


The U.S. stock markets drifted Tuesday, as investors digested some mixed economic data. But the major averages managed to close modestly higher following Monday's big rally.

The Dow Jones Industrial Average rose 56 points (0.66 percent) to nearly 8,660. The tech-weighted Nasdaq composite went up two points to 1,502. The broader Standard & Poor's 500 index gained nine points, (0.8 percent) closing at 1,012.

Aerospace giant Boeing gave some support to the market. It told Wall Street it plans to remain profitable amid falling commercial jetliner production. Boeing has been diversifying, including a move into communications.

On the economic front, the U.S. housing market remained strong in August, with record sales of exisiting homes.

However, a new survey shows consumer confidence, a key measure of the U.S. economy, tumbled to a five and a half year low in September, as Americans worried about rising unemployment in the slowing economy.

A lot of layoffs in recent weeks pushed the U.S. jobless rate from 4.5 to 4.9 percent. Conference Board economist Delos Smith, who helped compile the consumer confidence survey, says job insecurity tends to cool consumer optimism. "That 4.9 was also a shock, a minor shock compared to September 11th, but still a shock that, yes, those announced layoffs are really starting to hit, in a sense real people," he said.

Only a small portion of the survey took into account the events of September 11. Experts fear October's numbers could be worse once people consider the fallout from the terrorist attacks on New York and Washington.

Analyst Brian Wesbury believes the economic news will not get better any time soon. "I think we're now in for a period of some kind of compounding economic problems, where higher unemployment generates lower retail sales and lower consumer confidence, which causes layoffs, which boosts unemployment, causing retail sales to slow even further," he said. "And I think that's likely to last for the next three to four months before we see a rebound next year."

Still, analysts say all that uncertainty, including the impact of the U.S. war on terrorism, did not dramatically alter the markets Tuesday. Trading may have been indecisive, but stocks eked out a small gain.

Two weeks after terrorists struck at the United States, Wall Street considers every positive move in the markets as a sign of returning stability.

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