U.S. stocks turned in an anemic performance Monday after last week's huge losses. Analysts say investors are not sure what to do in the uncertain economic climate.
The Dow Jones Industrial Average edged lower, by less than a point, 0.3, to end the day at 9,605. The tech-weighted Nasdaq composite did better, moving up 8 points, almost half a percent, to 1,696. The broader Standard and Poor's 500 index, which fell to a nearly three-year low Friday, gained six points closing at 1,093.
Stocks wobbled up and down throughout the trading session.
Market-watcher Nick Angiletta says investors lack conviction. "I think for the next few weeks we're in a very volatile market," he said. "Seems to be a panic anytime this market starts to rally. I think people are looking to come back in. I'm just not sure they're ready to do that."
Investors apparently are being held back partly by the mostly dismal corporate earnings outlook. Telecom provider Qwest Communications Monday cut its sales forecast for this year and next, and said it is cutting about six percent of its workforce. Meanwhile, U.S. tiremaker Michelin announced plans to reduce its workforce by seven percent, citing weak demand.
This added to the gloom of Friday's jobless report showing the unemployment rate in August climbed to its highest level in four years.
Investment strategist Ned Riley believes investors are unnecessarily panicked. He says people are too involved with the short-term economic picture. "What's bothering me right now about the market is that more people are looking at economic data from Friday and looking at this third quarter, and not really looking at the potential of this market and this economy in 2002 and beyond," he said.
However, John Ryding, chief economist at the Bear Stearns investment firm, believes even the longer term is clouded by the nature of the current slowdown. "This is a new era, information age recession. We're going through a major contraction in technology spending," he said. "And so, unlike the 1973 global recession, this time around there's not the inflation problem. Inflation is one of the good pieces of news. It's a drop in capital spending. And that's going to be of an uncertain length."
Experts agree the U.S. economic downturn is deeper and running longer than almost anyone anticipated.