Posted at 12:09 p.m., Thursday, November 8, 2001
Market slumps in anticipation of short recession
• Hawai'i Stocks
• Updated Market Chart
• Stock Quotes
Associated Press
NEW YORK — Investors' enthusiam for stocks dwindled late today on word that the Federal Reserve believes the economy is poised for a short recession. Stocks ended the day mixed after having soared for most of the session.
Prices fell after the release of the minutes of the Fed's Oct. 2 meeting, during which the central bank said the beleagured economy could be headed into a mild recession.
The Dow Jones industrial average, which soared as much as 167 points, closed up 33.15 or 0.4 percent, at 9,587.52, according to preliminary calculations.
For most of the session the Dow was well above its pre-Sept. 11 levels. The blue chips stood at 9,605.51 on Sept. 10, and then lost 1,369 points during the first week of trading after the terrorist attacks. While the Nasdaq composite index and the Standard & Poor's 500 index have closed above their pre-attack levels, the Dow has yet to achieve that goal.
The Nasdaq fell 9.76, or 0.5 percent, to 1,827.77, while the S&P 500 advanced 2.74, or 0.3 percent, to 1,118.54.
Still, analysts maintained that investors are feeling more optimistic about the future and that the late-day downturn was mild given how the market has rallied since Sept. 11.
"People are saying, `Look, things are starting to look better rather than worse,"' said Charles Pradilla, chief investment strategist at SG Cowen Securities.
Discount retailers rose on healthy same-store sales, those at stores open at least one year, for October. Discount department store Kohl's rose 37 cents to $61.31 on a 13.5 percent jump in same-store sales, while Wal-Mart gained 68 cents to $54.50 on a 6.7 percent increase.
Although the overall October sales performance was sluggish, these retailers' positive news was a relief to investors, who'd worried that consumer spending would slump further following the terrorist attacks. Consumer spending accounts for two-thirds of the nation's economy.
Among blue chips, Wall Street's advance was otherwise widespread as investors believe that many businesses stand to improve given the year's 10 interest rate cuts by the Fed. General Motors gained $1.01 to $43.75, American Express advanced 72 cents to $32.40 and 3M rose 95 cents to $111.40.
Tech stocks traded slightly lower as investors locked in profits from rallies in the Nasdaq, which had ended higher in the previous three sessions. Dell Computer slipped 11 cents to $26.14.
Analysts said the growing optimism about the economy results from the monetary stimulus of the rate cuts and the possibility of Congress passing a tax-cut packaged pushed by President Bush. They say there also are signs that business is improving following the attacks.
"There is anecdotal evidence that people are getting on with their lives. Our checks show that shopping malls, restaurants and movie theaters are getting fuller," said Arthur Hogan, chief market analyst at Jefferies & Co. "Things are just getting a little back to normal and that is a good sign."
Advancing issues outnumbered decliners 8 to 7 on the New York Stock Exchange. Volume came to 1.48 billion shares, compared with the 1.42 billion shares traded Wednesday.
The Russell 2000 index, which tracks smaller company stocks, fell 1.74, or 0.4 percent, to 439.06.
Analysts said the market also got a boost from an interest rate cut of half a percentage point by the European Central Bank today.
Stocks were also sharply higher in Europe. France's CAC-40 gained 1.8 percent, Britain's FT-SE advanced 1.2 percent and Germany's DAX index climbed 2.7 percent.
Japan's Nikkei stock average finishing up 1.4 percent.
