Stocks Close Flat on Economic Woes

N E W  Y O R K, Aug. 9, 2001 -- Stocks fell nominally as investors got fresh, yet largely unsurprising,evidence of the U.S. economic stagnation, along with mixed newsabout July retail sales.

A mixed batch of retail sales reports were among the latestcauses of investor jitters, after retailers like Abercrombie &Fitch reported a bigger-than-expected drop in Julysales.

The economic outlook was no less grim, following a rise injobless claims and Wednesday's downbeat "beige book" summary ofregional economic conditions released on Wednesday, painted apicture of lagging growth.

"There are all these incremental pieces of news showingthat the economy is still slowing — there's nowhere to run toand no place to hide, " said Donna Van Vlack, director oftrading at Brandywine Asset Management.

Major stock indexes pulled up from their session lows,struggling back after Wednesday's brutal session, but analystswere doubtful the market would make a significant come-back.

"At this point, who isn't a skeptic?" said Charles Payne,analyst at Wall Street Strategies. "We're getting all kinds ofcontradictory signals from the market. At least on a short-termbasis, I think everyone would have to agree that the market isoversold, but that still doesn't mean it's going to rebound."

The Dow Jones industrial average edged up 5.06points, or 0.05 percent, to 10,298.56, according to the latestdata, while the Nasdaq composite slipped 3.04 points,or 0.16 percent, to 1,963.32, escaping by four points a nearlyfour-month closing low. The benchmark Standard & Poor's 500index fell 0.10 of a point to 1,183.43.

Economic Data Depresses Investors

Heightening worries about the nation's economy, the LaborDepartment said the number of Americans seeking first-timeclaims for jobless benefits jumped by 33,000 in the latestweek, more than economists surveyed by Reuters had expected.

In addition, retailers slammed Wall Street withdisappointing sales.

Still, some traders said the bad news was widely expected,providing some ballast to an already pounded stock market.

Among retailers, Gap Inc. fared the worst, thestock dropping $1.57, or 5.8 percent, to $25.60 after the No. 1U.S. apparel chain said sales at stores open year or longerfell a greater-than-expected 12 percent in July from a yearago. Gap also said may eliminate another 790 jobs, on top of1,300 layoffs announced last month.

Most U.S. department stores and apparel chains have seensales and profits sag since the fourth quarter as shoppers curbspending on clothing and other items they deem nonessential.Analysts now look to first half 2002 for any meaningfulrecovery.

Wal-Mart the nation's largest retailer, saidsame-store sales in July rose 6 percent from a year ago, aboveits expectations. Analysts had forecast an increase of 4percent to 8 percent, compared with year-ago growth of 6.5percent. Wal-Mart shares fell 36 cents to $54.17.

Wednesday’s Dismal Data

The Beige Book report issued by the Federal Reserve onWednesday worried investors after it said weakness in thefactory sector was seen in almost all regions.

The grim tone added to negative sentiment in the stockmarket on Wednesday. The Dow Jones industrial average ended theday down 165.24 points, while the Nasdaq composite fell 61.43points, putting it once again below the 2000 barrier.

The Nasdaq 100 closed at 1,626 on Wednesday, below a keysupport level of 1,680, Sheinberg said.

Corporate News

Worries that the weak economy and struggling stocks willbite into profits at Wall Street's biggest firms buffeted brokerage stocks sending a key index of financial stocks to its lowest level in nearly a month.

The American Stock Exchange broker-dealer index wasdown nearly 3 percent, its fifth consecutive day in negativeterritory and putting it at levels not seen since July 12.

"Financial stocks are always very correlated with themarkets and the markets are bad," said Guy Moszkowski, ananalyst at Salomon Smith Barney. "And there is a lot of macro-economic pessimism out there about when there could be arecovery."

Morgan Stanley was off $2.50, or more than 4 percent, at$55.75, while other financial stocks, like blue-chip companyAmerican Express Co. fell 57 cents to $39.22.

Trading was moderate with 822 million shares traded on theNew York Stock Exchange and 1.1 billion on the Nasdaq.

Amid merger news, Solectron Corp. fell $2.16 to$15.04 after the world's largest electronics contractmanufacturer agreed to buy Canada's C-MAC Industries Inc.for $2.7 billion to expand its technology,manufacturing capacity and access to the automotive market.

Based on Solectron's closing price of $17.20 on Wednesday,the deal is valued at a 33 percent premium over the Canadiancompany's stock at Wednesday's close. C-MAC's U.S. tradedshares jumped $3.23 to $25.90.

Western Wireless Corp. was off $3.07 at $32.28after the wireless telephone service provider posted a largerthan expected loss. It also said subscriber growth fell shortof expectations.

Anchor Gaming the gambling equipment maker nowmerging with industry giant International Game Technologyjumped $2.30 to $50.10 after its earnings rose 9percent. The company expects to report fiscal first-quarterprofit of $1.25 a share, more than the average forecast of$1.15 by analysts surveyed by Thomson Financial/First Call.

Nortel Networks Corp. slipped 17 cents to$7.45 and was the most-active stock on the NYSE. The world'slargest telecommunications equipment supplier said it plans toprivately sell $1 billion of convertible senior notes. The saleof the seven-year notes is expected on Thursday night, a personclose to the sale said.

The Associated Press and Reuters contributed to this report-->