US stock prices were lower Friday under the weight of a bleak outlook for corporate profits. New jobs data released by the Labor Department indicate the U-S economy is barely growing.
The Dow Jones Industrial Average dropped 38 points, a fractional decline, to 10,512. The broader Standard and Poor's 500 index fell six points, half a percent, while the tech-weighted NASDAQ composite snapped a three-day winning streak, closing one percent lower.
But the NASDAQ was up nearly two percent for the week. The Dow Industrials finished one percent higher.
Latest on the U.S. economy shows the unemployment rate in July was unchanged at four-point-five percent. The rate of decline in manufacturing jobs slowed, and wages went up three-tenths of one percent. Some experts said this should help boost consumer confidence and spending.
However, Jim Glassman, a senior economist with JP Morgan Chase, says the numbers suggest the U-S economy remains sluggish. He expects the central bank will have to cut interest rates again. "We continue to think the 'Fed's' going to cut rates 25-basis points in August. They probably will have to do more in October," he said. "This is not an economy that's booming and it needs help."
The stronger-than-expected jobs report did not help the market. Analysts say investors were focused on lackluster corporate earnings and the bleak outlook for the rest of the year.
Some analysts on Wall Street believe the market can rise above the downdraft of a slower economy. Analyst Mike Driscoll from the Credit Suisse First Boston investment firm believes the market has shown resilience in the face of bad news and is on its way up again. "The second quarter I think is going to turn out to be just a horrible earnings period that people are going to remember, not so fondly," he said. "But the fact that we did kind of weather it, we've come through it. The Dow is down a couple of percentage points year-to-date. The S & P is down seven percent. If you keep all that in mind, we really, I think, have held together pretty well. And I do think we're going to go better from here.
How much better is a subject of debate even among the more optimistic analysts. Meanwhile, others are looking beyond 2001 to next year, when they feel it is relatively safe to say that the U.S. economy should be looking more robust.