- The Washington Times - Saturday, July 7, 2001

ASSOCIATED PRESS
Wall Street's pessimism about earnings deepened yesterday, sending the Dow Jones Industrial Average down 227 points with more bad news in the technology sector.
The latest earnings warnings, combined with news of an increase in the June unemployment rate, exacerbated fears that second-quarter results might be even worse than expected and that a business turnaround will not happen before 2002.
The Dow fell 227 to 10,253, for a loss of 2.2 percent, extending its drop of the previous two sessions.
Broader stock measures also tumbled. The Nasdaq Composite Index closed down 76, or 3.7 percent, at 2,004 its fourth consecutive daily drop, while the Standard & Poor's 500 index lost 29 to 1,191, or 2.4 percent, its third straight such decline.
The losses capped a disappointing week for all three indicators. The Dow ended the week down 2.4 percent its seventh straight weekly decline while the S&P; dropped 2.8 percent. The Nasdaq saw the biggest decline, sliding 7.2 percent for the week.
Trading volume was light throughout the week because of the Independence Day holiday Wednesday. Still, analysts said the drop reflects a general uneasiness about where the market is headed.
The degree of the reductions made investors think twice about other technology issues, including IBM, which fell $5.60 to $106.50, and Intel, which dropped $1.41 to $28.43.
Non-technology stocks weren't immune from investors' frustration. America West Holdings, the parent carrier for America West Airlines, fell 34 cents to $9.32 on news it expects the carrier to post a second-quarter net loss because of the weak U.S. economy and high fuel prices.
But retailer Federated Department Stores managed a small gain, rising 23 cents to $38.24, despite a profit warning blamed on weak sales.
The reduced forecasts are the latest in a string of warnings that began weeks ago in advance of second-quarter reports due out this month.
Although Wall Street was expecting weak results, the extent of the warnings, combined with most companies' inability to predict when those figures will improve, has fouled investors' mood. The fact that warnings have come from an array of sectors, rather than just technology as expected, has also upset the market.
As a result, instead of buying stocks on expectations of a future turnaround, investors have been cautiously buying during the market's dips and selling as soon as stocks showed any strength. The losses have also eroded the market's huge rally this spring, although the major indexes remain well above their lows for the year.
A new Labor Department report gave investors little reason to change their strategy. The figures yesterday showed the nation's unemployment rate rose 0.1 percentage point to 4.5 percent in June from May as manufacturers continued to endure heavy job losses and demand for workers in service industries fell to the lowest level in 10 months.
Declining issues led advancers 2 to 1 on the New York Stock Exchange. Volume was 1.04 billion shares, compared with 928.74 million at the like point Thursday.
The Russell 2000 index fell 9.47, or 1.9 percent, to 483.26.
Overseas markets were also weak. Japan's Nikkei stock average fell 2.4 percent. In Europe, Germany's DAX index dropped 2.3 percent, Britain's FT-SE 100 lost 1.3 percent and France's CAC-40 slipped 2.4 percent.

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