Monday, August 5, 2002
Sharp gyrations and the heaviest selling period since the 1987 stock market crash have left investors with the hard task of trying to anticipate the market's next move. The Dow began the week with a 5 percent jump. But those gains quickly eroded when a string of economic data showed that the U.S. economy was weaker than investors would like. Helping the market was a quieting in corporate scandals as Washington takes action against the miscreants. But the market remains emotionally driven, exposed to explosive movements in either direction. The Nasdaq, DAX and Bolsa were down on the week. Other indexes followed here rose anywhere from 0.4 percent (South Korean Kospi) to 3.6 percent (Toronto S&P/TSX composite). The Kospi remains the only index up on the year.
Investors shifted their focus to the economy last week amid a deluge of weak economic data for the United States and overseas. In the United States, the annual revisions to the gross domestic product figures forced analysts to relearn history. And second quarter data were weak, although they showed that the economy was growing albeit very slowly at an annual rate of 1.1 percent. Overseas, Germany is still struggling to recover from recession while Japan's economy probably shrank in the second quarter.
The European Central Bank and the Bank of England kept interest rates unchanged for a ninth month amid signs that economic recoveries in Europe and the U.K. are faltering. The ECB left its key interest rate at 3.25 percent, the level it has been at since November. British policy makers kept their benchmark rate at 4 percent, a 38-year low. The Bank of England lowered borrowing costs seven times last year while the ECB cut rates four times. The Federal Reserve pared its overnight lending rate 11 times to 1.75 percent.
Dreary economic data take their toll
