August ends
on low note

Mixed signals on the economy
are weighing on Wall Street

---

By Hope Yen
Associated Press

NEW YORK >> If Wall Street hoped for solid evidence this past week of an unfaltering economic recovery, it was disappointed. Durable good orders gained, but consumer confidence tumbled. The gross domestic product grew, but so did jobless claims.

Responding to such mixed indicators, the market fluctuated before ultimately breaking a five-week winning streak. Analysts say the volatility might offer a shaky prognosis for September and beyond, as the economy continues to send confusing signals about its turnaround.

"Investors are disappointed there is no clear indication of growth," said Tracy Herrick, chief investment strategist at Jefferies & Co. "But it takes time. I think that we will have to wait until at least October."

For certain, other factors contributed to the week's selling. Investors were looking to cash in profits after five straight weeks of gains. Light pre-holiday trading in advance of Labor Day contributed to price swings.

But analysts say the week's economic reports failed to reassure investors about the strength of the recovery. And that helped give trading a more negative tone than Wall Street saw in the first part of August.

On Tuesday, a Commerce Department report showed an 8.7 percent surge in durable good orders in July. But a sharp drop in consumer confidence in August overshadowed the news, pushing blue chips down 130 points.

On Thursday, investors were discouraged by an unexpected rise in jobless claims, but also relieved that a figure showing slow growth in the gross domestic product wasn't revised downward. After a bumpy day, the Dow Jones industrials ended down 23 points.

Yesterday brought another mixed batch of numbers, including an upbeat report on manufacturing in the Midwest but also news of stagnant personal incomes. Stocks fell, and so the Dow and the Standard & Poors 500 broke five straight weeks of gains. The Nasdaq composite index ended a three-week advance.

The Dow and Nasdaq also posted their fifth straight monthly decline, unenviable distinctions not seen since September 1981 for blue chips and May 1984 for tech stocks.

Still, since its July 23 closing low of 7,702.34, the Dow is up about 1,000 points, an indication that the market's overall tone has improved.

Analysts don't expect September to provide any greater clarity on the economy, although a fresh batch of statistics will start flowing in right after Labor Day.

"There's still a good deal of volatility in the economy," said Sherry Cooper, global economic strategist for Harris Bank of Chicago. "One thing that's unsettling is the apparent deterioration in the labor market. The fear is that layoff announcements will continue."

Analysts also question whether the market will have some reaction to the anniversary of the Sept. 11 attacks. Tensions with Iraq might also make for an uncertain month.

Moreover, analysts are concerned about companies' third-quarter earnings warnings. Reduced outlooks and downgrades of stocks pressured the market this past week, particularly in the tech sector.

"The direction of the markets will be really indicated when we get more economic data and company reports as we go into the earnings season," said Ted Mortonson, head of sales and trading at RBC Capital Markets. "We need more data points to pick a bottom to solidify the investment, and we just don't have it."

For the week, the Dow fell 209.46, or 2.4 percent, after dropping 7.49 yesterday. The blue chips closed the week at 8,663.50. The Nasdaq had a weekly drop of 65.77 or 4.8 percent. Yesterday, the Nasdaq fell 20.92 to 1,314.85. For the week, the S&P 500 fell 24.79, or 2.6 percent. Yesterday, the S&P fell 1.73 to 916.07. And the Russell 2000 index recorded a weekly drop of 9.17, or 2.3 percent.

The Wilshire Associates Equity Index, which represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq issues, ended the week at $8.654 trillion, down $222.85 billion from the previous week. A year ago, the index was $10.515 trillion.