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US Stocks Mixed as Investors Remain Cautious - 2001-10-18

U.S. stock prices were mixed Thursday, with not a lot of movement in either direction, as investors remain cautious. Analysts say it is not surprising, given the flow of news outside the financial world, including new exposures to the potentially deadly anthrax bacteria. The Dow Jones Industrial Average fell 69 points, .75 percent, to 9,163. The broader Standard & Poor's 500 index dropped 8 points, while the tech-weighted Nasdaq composite ended on the plus side with a gain of less than .5 percent.

Corporate news was mixed. Leading auto maker General Motors and cell phone chip maker Texas Instruments beat lowered earnings estimates but warned of a weaker fourth quarter.

Soft drink giant Coca Cola beat estimates and reaffirmed its earnings targets through next year. Drug company Merck also beat expectations but investors focused on lower sales of its premier pain-killer Vioxx.

The latest on the economy shows a further weakening of the U.S. labor market. A larger than expected number of people filed first time claims for unemployment benefits last week.

A great deal of money left the stock markets in the wake of the September 11 terrorist attack. According to one estimate, investors took a record $32 billion out of stock funds during the sell off immediately following the attacks.

Analysts say a lot of that cash remains on the sidelines and will probably stay there as long as investors are distracted by outside news.

Veteran market watcher Ted Weisberg believes the anthrax scare is a big factor in market activity and will be for the foreseeable future.

"Floor traders, like everybody else, are a little, if not a lot nervous. The headlines are very distracting and tend to be negative," he says. "This is a new world for all of us, and we just don't know how to react to it. And as far as the market's concerned, and stock trading, it creates an 'unknown' and it may be a huge unknown."

So, with one eye on the proverbial stock ticker tape, the other on newswires, investors are wading through reams of uncertainty. Many fund managers are trying to persuade investors to shift their focus to next year, when the U.S. economy is expected to show signs of recovery. But for now, conviction seems to be in short supply on Wall Street.