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Modest Losses on Wall Street Tuesday - 2001-10-23

An early rally turned into modest losses on Wall Street Tuesday. The stock markets went into reverse after more bad anthrax news. Washington confirmed that two postal workers died after being infected with the bacteria and traces of anthrax were found at a remote White House mail area. The Dow Jones Industrial Average dropped 36 points, less than .5 percent, to 9,340. The broader Standard and Poor's 500 index lost five points, while the tech-weighted Nasdaq composite slipped fractionally, down about 3 points.

Analysts say anthrax was probably not the only reason buying turned into a mild bout of selling. But fear associated with bio-terrorism apparently is real on Wall Street. John Mendelson, an analyst with Schwab Capital Markets, said "We still have this fear, a personal fear you might say, in the market, which I never dealt with before, nor has anybody else. That's what overhanging the market."

Otherwise, it was more of the same from corporate America, with a slowing economy cutting into profits. Number one U.S. oil company Exxon Mobil reported a 23 percent drop in third-quarter earnings. The company blamed slumping demand, as well as lower crude oil prices and overproduction by OPEC.

Meanwhile, companies continue announcing lay offs. Telephone and cable giant AT&T is the latest to add to the numbers. It plans to cut another 2,400 jobs, bringing its total for the year to 8,000. That represents about 6.4 percent of the AT&T workforce.

According to business analyst Jim Glassman, the weakening labor market could delay an economic recovery. "If the lay off pace continues - [if] lay offs continue to run at the high level they are right now - that's going to undermine income growth, that's going to undermine the consumer picture, and that would just reverberate back to business in general," he said.

A new report by the Conference Board, a private business research group, says unemployment could reach six percent next year. It also warns the United States is probably facing a decline in Gross Domestic Product in the final quarter of this year, increasing the likelihood that the U.S. economy will slip into recession.

Wall Street experts say with all the concern over corporate profits, an economic recovery and terrorism, the U.S. financial markets have been acting well. Tuesday's sell-off was mild. Analysts say investors are cautious, but not in a panic.