IT was another familiar week of depressed trading on Wall Street for the week ended August 17, 2001, as investors continued to pin their hopes on a substantial slash in interest rates by the Federal Reserve at its next monetary policy meeting on Tuesday of this week.

This would be the seventh consecutive cut in interest rates by the Federal Reserve's policy makers, as the central bank attempts to breathe new life into the country's ailing economy. On Monday, NASDAQ stocks rose while the Dow limped, in anticipation of Home Depot's and Wal-Mart's earnings reports the following day. The technology-laced index rose 25.78 points to 1,982.25 for its first gain after seven sessions while the Dow Jones industrial fell 0.34 per cent to 10,415.91

The news responsible for the tech-stock rally came from Goldman & Sachs which added Intel (up $US0.61 to US$30.56) to its 'recommended' list of technology stocks, in upgrading its forecast for the semiconductor industry. "The recovery writing is in on the wall, and we do not see how investors will be able to resist the inflection point", opined an analyst from the company, adding that the fundamentals were likely to improve towards the end of the year. Other technology stocks gaining were Analog Devices, rising US$1.54 to US$48.99 and Maxim Integrated advancing US$3.00 to US$51.19. This could be interpreted as misguided optimism on their part, however, as the wealth of poor corporate and economic data would suggest. Any signs of a significant return to at least moderate positive growth rates cannot realistically materialise before the end of the year, despite the series of interest rate cuts. On Tuesday, mixed profit reports along with continually weak economic data, kept all three market indices in check. In registering a 17.72-point loss on the day, the NASDAQ fell to 20 per cent for the year. The Dow Jones was not far behind as the blue chips fell 3.74 points to close on 10,412.17 as it dipped below a level it had not seen since April of 1999. The S&P 500 widened its loss for the year to 10 per cent as it lost 4.56 points to 1,186.73.

Government report

A Government report disclosed also, that retail sales remained virtually unaltered for July at US$291.7 billion compared to the previous two months' figures of US$291.6 billion and $291.7 respectively. The following day's trading also witnessed declines for the blue chips and the NASDAQ, due to profit jitters by investors ahead of corporate reports for Hewlett-Packard and Dell Computers on Thursday. Sure enough, this apprehension was amply justified.

The fiscal second-quarter profit at Dell, declined to 16 cents per share from the 22 cents in 2000, while Hewlett-Packard disclosed that its earnings for the quarter had declined by 88 per cent for an earnings per share of a mere six cents. This was a tremendous loss from the similar period last year when the earnings were 51 cents per share. Fortunately, positive news from Cisco Systems and Microsoft steered the index away from a decline. The NASDAQ rose 11.43 points to 1,930.32 while the Dow, helped by good reports from United Technologies and Procter & Gamble, gained 46.57 points to end on 10,392.52.

Friday's trading saw the markets closing the week on a losing note, as the indices plummeted on a trio of corporate news from Ford, Dell Computers and Gap. The NASDAQ fell 63.31 points, or 3.3 per cent, to 1,867.01, its worst finish since April 10, when the index closed at 1,852.03.. For the week, the index declined 4.6 per cent.

The Dow industrials slumped 151.74, or 1.5 per cent to 10,240.78, widening its weekly loss to 1.7 per cent. A broader index, the Standard & Poor's 500, slid 19.69, or 1.7 per cent, falling 2.4 per cent over the last five sessions.

Gap, one of the biggest names in the retail clothing business, predicted that its reports for the just-ended quarter would come in below forecasts at 21 cents per share. Also anticipating reduced earnings was Ford Motor, which confirmed plants to cut its North American staff complement by 10 per cent. Dell followed suit in forecasting a five per cent drop off in sales for the current quarter, after it reported a reduced earnings per share of 16 cents compared to 22 cents a year earlier.

In light of the week's series of dour economic and corporate reports, the Federal Reserve's policy maker will be even more inclined to considerably reduce interest rates at its next meeting on August 21 this week. Nevertheless, as anxious as market players on Wall Street may be for better earnings from companies, the latest economic indicator do suggest that a great amount of prudence in investing must still be exercised.