BUSINESS
The Michigan Daily -- Friday, March 23, 2001 -
Dow recovers after slipping into bear market
NEW YORK (AP) - Despondent investors inten-
sified their selloff of blue chip stocks yesterday,
accelerating the decline in the Dow Jones industrial
average and narrowly avoiding bear market territory.
A last-hour rally allowed the how to recover
somewhat, but the index still closed with a loss of
nearly 100 points.
Investors are in "deep despair." said Ilugh John-
son, chief investment officer far First Albany Corp.
"There is a sense of giving up. They are extraordi-
narily depressed and demoralized."
The Dow, which dropped by triple digits in six of
the past nine trading sessions, tumbled to the 9.379
level in the opening minutes of trading, putting the
blue chip index down more than 20 percent from the
closing high of I 1,722.98 it reached on Jan. 14.
2000. A decline of 20 percent is considered bear
market territory.
The Dow continued to slide in a heavily traded
session, falling more than 380 points. It regained
some g(round in the final hour and closed dlown a
more moderate 97.52 at 9.389.48.
Yesterday's loss means the Dow, which last week
suffered its worst-ever weekly point drop, has fallen
1.465.77, or 13.5 percent, over the last 10 trading
sessions.
Broader market indicators were mixed.
The Nasdaq composite index, down more than 62
percent from its own high of 5,048.62 reached
March 10. 2000, advanced 67.47 to 1,897.70.
The market's broadest measure, the Standard &
Poor's 500, finished down 4.56 at 1,117.58, having
made a last-minute recovery of its own. The S&P
500 has lost more than a quarter of its value since
peaking at 1,527.46 a year ago.
Despite the late recovery, the market's litany of
grim numbers "points out how much damage has
been done, and how we have gone from irrational
exuberance to irrational depression," said Alfred E.
Goldman,'director of market analysis for A.G.
Edwards & Sons in St. Louis.
According to traditional measures, a bear market
occurs when there is a drop of 20 percent over a sus-
tained period. While the tech sector landed in bear
market turf last year, Wall Street has been debating
whether the broader market has also become bear-
ish, or has just dipped into bear territory. The S&P
500 officially entered a bear market on March 12.
The Dow, which until last week was able to resist
the heavy selling that decimated the Nasdaq, has
fallen to bear levels because investors believe the
economy is getting much weaker, severely hamper-
ing even the most stalwart companies.
"This is about a market that is forecasting a reces-
sion." said Gary Kaltbaum, market technician fur
First Union Securities. "I know a lot of people are
saying we are not in a recession, but remember, 12
months ago people were saying technology was
great and wasn't going anywhere but up."
The Dow was able to curb its losses as the Nasdaq
advanced on a rebound in deeply discounted tech
stocks. Still, Kaltbaum said, it's doubtful the Dow
will be able to sustain a recovery for quite some
time.
"You had to bounce from somewhere," he said.
"The Dow is in bad shape no matter what."
Almost bearishy.'
The Dow Jones industrial averagq
fell into bear market territory for
much of the day before recoverng
in the final hour to close down
97.52 at9.389.48.
Dow Jones industrial avg.
Intraday trading for Thursday March 22
'Previous
9,450 ;...close ...March 22
9,487.00 9,389.48
9400
9.350-.........................
9300
9250
9200
9,150 :;...... .
9,100'
9 0 1230 4pn
a m p m
eer Robert Brooks holds his finger to his
mouth watching the numbers from the floor
of the New York Stock Exchange yesterday.
SOURCE. Quote com
AP
State unemployment rate
remains stable in February
0 IM
By John Polley
Daly Staff)Reporter
While prevailing economic cond-itions continue to trou-
ble the manufacturingT sector, a small rebound in automo-
tive employment succeeded in stabilizing the Michigan
unemployment rate in February.
Following a steep increase in Michigan unemployment
between December and January, the state Department of
er Development reported this week that the unem-
pioyment rate remained steady in February at 4.5 percent.
February marks only the second
month in nearly six years that unem- February n
ployment in Michigan has eclipsed the
national rate, which remained constant the secon
at 4.2 percent.
Many of the losses the state has suf- nearly six1
fered in past months have come at ther
hands of the automotive industry, which unemployi
been particularly affected by the
r nt economic downturn. Michigant
"Automotive has had a number of
short-term layoffs to adjust production the nation
to meet demand," said Joe B illig, a
senior regional analyst for the Michigan Department of
Career Development. "Michigan has done a lot to diversi-
fy its economy in recent years, but manufacturig is very,
very important here."
The report cited an increase of 13,000 jobs in the labor
force, with employment growing by 9,000 and unemploy-
nm t growing by 4,000. The retail and manufacturing sc-
t accounted for the bulk of new jobs, contributing
s
d!
I
ha
al
9,000 positions each.
"Many of' the (new) jobs in manufacturing were a
rebound from shorter term layoffs we had in the Decem-
ber-January period." Billig noted. "Until the automotive
sector picks up, I doubt we'll see much growth in manu-
facturing."
Michigan's deep involvement in manufacturing makes
the state particularly vulnerable to cyclical movements on
the national economic scene. The forecast for employ-
ment in Michigan will remain closely tied to the projected
health of the economy in the coming months.
The Conference Board reported yes-
arks only terday that the Index of Leading Eco-
nomic indicators, a report used to
month in forecast the national economy, had
decreased last month by 0.2 percent.
ears thft With the February decline, the index
resumed the downward trend of recent
ent in months that had been interrupted in
January by a 0.5 percent increase.
3s eclipsed "Ahhough lthe leading index declined
in four of' the last five months, it has
rate not declined enough to signal a reces-
sion," the report stated. A recession is
forecasted when the index falls by an annualized rate of'
3.5 percent over a six-month period.
The report indicated that eased monetary policy had
contributed positively to the index, while initial claims for
unemployment insurance and average weekly manufactur-
ing hours were the indicators that lead the decline. Con-
sumer expectations and stock prices were among the other
indicators contributing negatively to the index.
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Public Lecture and Reception
Tuesday, March 27,2001 4:10 pm
Rackham Amphitheatre
Presented by LSA
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