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US Markets Down, Investors Await Interest Rate Cut - 2001-10-01

U.S. stocks posted modest losses Monday, as Wall Street awaits a U.S. central bank decision on interest rates. The Federal Reserve is widely expected to lower rates Tuesday for the ninth time this year in an effort to boost the U.S. economy.

The Dow Jones Industrial Average slipped 11 points, down just a fraction, to 8,836. The broader Standard & Poor's 500 Index lost a couple of points, closing at 1,039. The tech-weighted Nasdaq Composite Index took a bigger loss, dropping more than one percent, to 1,480.

Technology shares were hit by more analyst downgrades and earnings warnings. Some experts predict semiconductors will have two negative quarters coming up. The stock of leading chipmaker Intel was under pressure.

Wall Street headed into Monday's session with upward momentum from last week's rally. But investors turned cautious on the first day of the final quarter of the year. Volume was the lightest since trading resumed in the wake of the September 11 terrorist attacks. Analysts say investors were focused on the slowing U.S. economy.

New data showed U.S. manufacturing in September did better than forecast. But it was still in contraction for the 14th straight month.

The manufacturing numbers are among the key reports the U.S. central bank will be looking at during its meeting Tuesday.

Market watcher Stephen Porpora says Monday's market activity was not unusual, considering the heightened level of uncertainty following September 11. "Today would be normal to get a pullback, consolidation, you might say, especially in view of we're ahead of the 'Fed' news tomorrow," he said. "And again, there's always this overhanging note of caution. There's a lot of big news that could hit us in the face at any moment."

The betting on Wall Street is the central bank will announce at least a quarter percent reduction in interest rates Tuesday. Some experts believe the cut could be as much as a half percent.

The Fed's eight rate cuts so far have not helped the battered U.S. stock markets. The Nasdaq, for one, is down about 70 percent since technology peaked in March of 2000.