- The Washington Times - Wednesday, July 8, 2009

UPDATED:

Wall Street is trying Wednesday to end a recent slide in which the Dow Jones Industrial Average has dropped to its lowest mark in 10 weeks.

The Dow was down 47.31 points, to 8,116.29, in midday trading. The broader Standard & Poor’s 500-stock Index was at 872.28, down 8.75 points, and the tech-heavy Nasdaq was down 14.45 points, to 1,731.72.

The recent declines have followed persistent unemployment and declining oil prices over the past weeks, which investors see as another sign the economy is stagnant.

The price of light crude midday Wednesday was selling for roughly $60.45 a barrel on the New York Mercantile, compared to $73 last week.

The major markets Tuesday fell roughly 2 percent as crude prices declined for the fifth straight day. The Dow lost 161.27 points, or 1.9 percent.

Before the recent slide, the markets had an impressive rally that began in early March after hitting a 12-year low.

The unemployment rate in June reached a 26-year high of 9.5 percent. And employers cut 467,000 jobs, roughly 104,000 more than economists expected.

“The markets have basically gone sideways since mid May,” said Brian Lipps, a branch manager for Charles Schwab & Co. Inc. “All of the concerns since the rally started are still there. The run-up was so fast that we’re now going through a necessary correction and consolidation phase. So far [the rally] has been about a lot of cash coming in. We’re going to have to see some growth.”

Investors on Wednesday will look for some direction when U.S. aluminum maker Alcoa Inc. becomes the first to release its report on second-quarter earnings. The report is due after the markets close.

Analysts expect the company to post a quarterly loss of 38 cents a share, compared to earnings of 66 cents a share in the second quarter of 2008.

Mr. Lipps doesn’t think the markets will respond strongly to this quarter’s earnings reports because “expectations are still really low.”

However, he thinks third-quarter reports will be more telling because “things really started to get bad” in the third quarter of 2008.

Investors also will focus on a government report on May consumer credit, which is expected to show Americans are borrowing less and paying down debt. The report is due at 3 p.m. EDT.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.43 percent from 3.46 percent Tuesday.

The dollar is falling against other major currencies and gold prices also fell.

Overseas, Japan’s Nikkei stock average fell 2.35 percent. In afternoon trading, Britain’s FTSE 100 index was down 1.12 percent, Germany’s DAX was down 0.56 percent while France’s CAC-40 was down 1.27 percent.

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