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Tone on Wall Street Remains Positive - 2001-10-05


U.S. stock prices were mixed Thursday. The "blue chips" sank a little after two days of solid gains. But analysts say the tone on Wall Street remains positive. The market has recovered a lot of the ground it lost immediately following last month's terrorist attacks.

The Dow Jones Industrial Average fell 62 points, less than one percent, to 9,060. The broader Standard and Poor's 500 index dropped fractionally, down two points.

But the tech-weighted Nasdaq composite rallied another one percent, pushed higher mostly by a positive earnings report from Dell. The leading personal computer maker said its earnings are still on target, and it recovered faster than expected from the September 11th attack on the World Trade Center.

Dow component Alcoa, the world's top aluminum producer, weighed on the Industrials. The company reported a nearly eight percent decline in third quarter profits and said business will be slow through the end of the year.

Leading fiber-optic cable maker, Corning, also warned of a profit shortfall as the company restructures to adjust to falling demand.

The latest on the U.S. economy shows jobless claims soared last week to their highest level in nine years.

Data also show that announced corporate lay-offs for the entire month of September jumped 77 percent from August, the largest monthly level this year. There have been over a million announced lay-offs since January.

John Challenger tracks the job situation. He says it looks like the pressure will continue on companies to reduce costs. "We've now seen almost a 1.3 million job cuts announced," he said. "That's the heaviest year through nine months than we saw in the entire 1990's when the economy was very strong. Certainly these cuts are going to continue for some time because the pressures on companies aren't slowing down."

Some experts caution that the numbers reflect mostly plans for job cuts, not actual lay-offs. The hope is that companies will find a way to keep many of their employees. Among the hardest hit in the labor force are airline and hotel workers. The airlines, at least, will be getting some help in the form of a government bailout package to soften the losses stemming from a decline in travel in the wake of September 11.

September's jobs report comes out Friday, offering a bigger picture of the U-S labor market. Most economists expect the unemployment rate to hit five percent, perhaps higher.

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