Posted 2:15 p.m., Tuesday, May 8, 2001

Stock performance mixed as investors await earnings data

Associated Press

NEW YORK — Skittishness about future earnings sent financial issues lower today, while technology stocks advanced modestly in subdued trading.

Analysts said Wall Street was waiting for tech bellwether Cisco Systems' third-quarter earnings, due out after the market closed, before making any big moves. The anticipation didn't hurt the stock, though, which ended the regular session up $1.11, up 6 percent, at $20.36.

"A lot of focus is being placed on Cisco's numbers, but more importantly what they say about coming quarters," said Todd Clark, co-head of trading at WR Hambrecht. "It's still unclear how the tech sector is going to perform in months ahead. (Wall) Street is looking for something to guide them as to what business conditions are going to be like going forward."

The Dow Jones industrial average closed down 52.12 at 10,883.05, according to preliminary calculations, recovering from a 100-plus point drop earlier in the day.

Broader indexes were mixed. The Nasdaq composite index was up 24.37 at 2,197.94, while the Standard & Poor's 500 index dropped 2.44 to 1,261.07.

Stocks advanced strongly in April and have held most of their gains, but anxiety about the future remains strong.

Market watchers say Wall Street likely will remain cautious until May 15, when the Federal Reserve decides whether to cut interest rates again. So far the Fed has cut rates four times this year in an attempt to revive the staggering economy.

Today's economic data added to the tentativeness.

The Labor Department reported that productivity, a key measure of rising living standards, fell at a 0.1 percent rate in the first quarter, the first decline in six years. The department also reported that unit labor costs jumped by a 5.2 percent rate in the first quarter, the biggest increase since the fourth quarter of 1997, when they rose at a 5.5 percent rate.

Labor costs are a potential inflationary pressure — a factor that could discourage the Fed from further lowering interest rates.

"This market needs an interest-rate-cut catalyst. It's certainly not going to get a catalyst from earnings," said Richard Cripps, chief market strategist for Legg Mason of Baltimore. "What I'm concerned about is that we're getting less maneuvering room by the Fed for such a cut because the signs of inflationary pressure appear to be increasing."