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Quiet Day on Wall Street Produces Modests Gains - 2001-08-20


A quiet start to the trading week on Wall Street saw some modest gains. The markets all finished the day in positive territory as they ready themselves for a boost from the Federal Reserve.

It was an extremely light trading day on Wall Street, but already there is an improvement over last week.

The Dow Jones Industrial Average finished the day at 10,320, a one-day gain of 0.7 percent. The NASDAQ closed at 1,881, gaining 14 points or just under one percent. And the S&P 500 index finished the session up 9 points, to 1,171.

One reason for the good day's trading was a potential sign of stability in the U.S. economy. The closely watched Leading Economic Index rose again in the month of July. The index acts as a sign of where the country's economy is headed, and while it went up only a modest 0.3 percent, it still rose.

A major move has been announced in the global technology sector. The Japanese giant Fujitsu has announced it will slash 16,400 jobs from its worldwide operation. The company says a severe slump in profits and the state of the global economy has forced it to make this decision. Fujitsu says the cost of offering early retirements and other severance packages will run to 300 billion yen or roughly $2.5 billion.

Analysts have also been keeping a close eye on the strength of the dollar. For the most part it has continued to perform well against the other major currencies, but it has slipped in recent months against the Euro.

According to Matt Higgins of Merrill Lynch, this is temporary. He thinks an economic recovery will start in the U.S. before anywhere else, placing the dollar in a strong position.

"Already, U.S. leading indicators have picked up for four months in a row, while European indicators are flat, we don't see a turning point," he said. "We're going to see an earlier, stronger U.S. recovery, and that's something that's 'dollar positive' and limits the downside of the dollar."

More troubling news emerged in the automobile industry. Early on Monday, the brokerage house Credit Suisse First Boston trimmed profits estimates on Ford Motors for next year. Later in the day, Ford's main rival, GM, had its profit estimates cut as well.

Yet the overall economy is expected to get a boost on Tuesday. The Federal Reserve, the U.S. central bank, is widely expected to lower interest rates. That will be the seventh such cut this year and should provide Wall Street with a much-needed boost.