- The Washington Times - Friday, September 6, 2002

NEW YORK (AP) A spate of bad news about the economy, including sluggish productivity growth and disappointing retail sales, hit Wall Street hard yesterday and sent stocks falling sharply.
The sell-off more than offset the market's big advance from Wednesday, which analysts had downplayed to start with by attributing it to bargain hunters not investors ready to commit to stocks.
"Everyone is definitely looking at the data on the economy, and they really want to see some glimmers of hope that we are going to get a pickup in profit growth. Without that happening so far, people are a little skittish," said Joseph Keating, chief investment officer at AmSouth Asset Management in Birmingham, Ala.
The Dow Jones Industrial Average closed down 141.42, or 1.7 percent, to 8,283.70. The loss wiped out Wednesday's 117-point gain, the Dow's only advance in seven sessions.
The broader market also dropped sharply. The Nasdaq Composite Index sank 41.28, or 3.2 percent, to 1,251.03, its fifth loss in seven days.
The Standard & Poor's 500 index fell 14.25, or 1.6 percent, to 879.15, its sixth loss in seven days.
Analysts said investors are also nervous about the possibility of a war with Iraq and the upcoming anniversary of the September 11 terrorist attacks.
"I hate to use 9/11 as an excuse, but I think there is genuine apprehension and grief going into it," said Scott Bleier, president of Hybridinvestors.com.
Wall Street faced several disappointments yesterday, including a report that productivity of U.S. companies grew at its slowest pace of the year during the second quarter. The Labor Department reported that productivity rose 1.5 percent. The reading was higher than the 1.2 percent analysts were expecting but marked a sharp drop from the 8.6 percent growth recorded in the first quarter.
In another report, new claims for unemployment insurance fell last week by a seasonally adjusted 8,000 to 403,000 after rising for three weeks in a row, the department said. Still, claims were at a level that indicates the labor market remains soft.
The Institute for Supply Management also had disappointing news, saying its non-manufacturing index for August stood at 50.9, below the 54.0 reading analysts were anticipating.
And the Commerce Department reported that orders to U.S. factories rose 4.7 percent in July, short of the 5 percent jump analysts were expecting.
The reports were a blow to investors yearning for evidence that the economy is strengthening and not, as some fear, slipping back into recession.
"Everyone is looking to see that there is some traction taking place in the economy. And the data just continues to say we are not accelerating," Mr. Keating said.
Retailers were among yesterday's losers, falling on disappointing August same-store sales, those at stores open at least one year. Abercrombie & Fitch dropped $1.91 to $21.86 on a 3 percent decrease in same-store sales.
May Department Stores, where same-store sales declined 8.6 percent, fell $1.14 to $27.61.
In technology, National Semiconductor fell $1.70 to $13.50 on downgrades from Bear Stearns and Credit Suisse First Boston.
Investors were anxious about technology bellwether Intel, which fell $1 to $15.11 ahead of its mid-quarter update.
After the market closed, the chip maker released its update, saying it expects third-quarter sales will be within previous forecasts but at the lower end of the range. Intel shares rose 49 cents to $15.70 in the extended-hours trading session.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Consolidated volume was light at 1.65 billion shares, below Wednesday's 1.67 billion shares.
The Russell 2000 index, the barometer of smaller company stocks, fell 8.69, or 2.2 percent, to 381.06.
Overseas, Japan's Nikkei stock average rose 1.6 percent yesterday. In Europe, France's CAC-40 declined 0.9 percent, Britain's FTSE 100 lost 0.4 percent and Germany's DAX index fell 2.1 percent.

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