SUSIE GHARIB: A glimmer of hope on Wall Street today, a day ahead of a policy meeting of the Federal Reserve. The Dow rose almost 80 points, and the NASDAQ added 14. Investors are counting on Fed policy makers to cut interest rates for the seventh time this year in an attempt to reinvigorate the economy. Suzanne Pratt takes a look at what Wall Street experts are saying about tomorrow's meeting.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Even after six interest rate cuts, the economy still needs something more to rev it up. That something is widely expected to come tomorrow when the Federal Reserve meets to set interest rate policy. According to Reuters, 25 out of 25 investment firms recently polled predict the Fed will trim short-term rates by a quarter of a point or 25 basis points. That would lower the Fed funds rate to 3.5 percent. While some economists can make an argument for a larger cut, few are forecasting one.

STEPHEN SLIFER, CHIEF ECONOMIST, LEHMAN BROTHERS: There is a little bit of a concern here that if the Fed cuts rates by 50, to me, it's sort of a tacit admission that they kind of made a mistake at the end of the June, that they misgauged things, things have turned out a lot weaker than what they thought, and maybe-just maybe-they end up scaring people a little bit.

PRATT: At the Fed's last meeting in June, policy makers disappointed Wall Street with a quarter-point cut after five half-point cuts earlier in the year. Since then, growth has remained sluggish, and questions have emerged over the effectiveness of monetary policy. But experts say it can take nine to 12 months before lower rates jump start the economy.

SLIFER: You could see things happening now, but it's a little bit soon to expect that. But so I don't know that we should be terribly disappointed that we haven't seen the impact yet. But obviously, with every passing month that we don't see something, the more nervous you're going to become.

PRATT: Lower rates have also done little to prop up stocks this year and, experts say, because a quarter-point cut is already priced into the market, tomorrow's trading should be ho-hum, unless, of course, the Fed indicates that it's finished easing.

RICHARD CRIPPS, CHIEF MARKET STRATEGIST, LEGG MASON: That is something that gets I think disseminated, that's going to be a negative. I don't think that's going to happen, but I think that there is some speculation out there that the Federal Reserve feels that they've put enough stimulus into the economy in terms of lowering interest rates and it's just about over with.

PRATT: Not everyone on Wall Street thinks the Fed will stop lowering interest rates after tomorrow's meeting. In fact, about one half the investment firms polled by Reuters say there will be at least one more rate cut by year end. Suzanne Pratt, "NIGHTLY BUSINESS REPORT," New York.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc.

SUSIE GHARIB: Joining me now to talk more about tomorrow's Fed meeting is the highly respected Fed expert David Jones. He's the chief economist of Aubrey Lanston. And nice to have you.

DAVID JONES, CHIEF ECONOMIST, AUBREY LANSTON: Nice to be with you.

GHARIB: So, you're expecting a quarter point cut, like many of the other economists that we've polled. Is this going to help the economy?

JONES: Hopefully. The seventh cut should start to do some good.

GHARIB: Lucky seven.

JONES: Remember, we've been lucky so far to keep the consumer and the housing sector cushioned from the extremely depressed business sector and maybe just maybe, as we look ahead through the end of the year, all of these rate cuts will begin to come into effect and give us at least a base for a recovery perhaps starting early next year.

GHARIB: Will this be it? Will this be it in terms of the rate cuts?

JONES: It's a good question. I'll flip a coin on that. I think I would put 50-50 odds on one more after this quarter point cut. That would bring us down to 3 1/4 percent on the Fed's overnight funds rate target, down from 6 ½, where it all began. I think the Fed would leave room for that kind of cut and I think they will keep their policy directive tilted toward weaker economic conditions, which would give us room for one more cut.

GHARIB: What do you think they might say in that policy statement? Are there new risks to the economy or the same old ones maybe getting worse?

JONES: This wording, Susie, is going to be absolutely critical and I think we should watch for words. I think what they will say is that at least the rate of getting worse is slowing or, to put it another way, we've seen the worst. It's behind us, probably in the second quarter.

GHARIB: What's the problem here, David? Why isn't the economy coming back? I mean six rate cuts and you and other economists have been saying, you know, wait six to nine months. We have been eight months now.

JONES: It's a post-high tech bubble world. The biggest nightmare for central bankers, Fed Chairman Greenspan included, are these asset price bubbles. In this case it was that high tech stock bubble which rose to proportions we wouldn't have dreamed of and then burst, of course, in March 2000. And what we're trying to do is pick up the pieces in the high tech sector as we have a major inventory adjustment and a huge pull back in business spending on new equipment and software. And until we work through that-and we haven't been through one like this before-until we work through that, we just have to look at an economy that's going to be growing very slowly.

GHARIB: When do you think that the economy will get back to normal?

JONES: Don't write this down, but it could be the fourth quarter of next year when we finally climb back.

GHARIB: 2002?

JONES: Every quarter is going to be a struggle but when we finally get back to that speed limit of 3 ½ to 4 percent that we thought we had before we came into this adjustment period. So, most people thought it was going to be the last half of this year. They're just one year or two early.

GHARIB: When we last talked in June before the last Fed meeting, you said that you thought the economy would barely avoid a recession. What's your view now?

JONES: It, I'll stick with that, but I'm shaky as I say it because the second quarter could actually be down when they revise the numbers. Remember, it was just up 0.7 percent. Inventories came in less than expected.

GHARIB: So we could have negative growth, you're saying-

JONES: But we won't-

GHARIB: -- when they revise the second quarter?

JONES: That's exactly right. But we won't reach the definition of a recession because I think the third quarter will be up a little bit, maybe 1 to 1 1/2 percent, maybe the fourth quarter a little bit more than that.

GHARIB: Real quickly, it's a frustrating time for investors. There just aren't seeing any action going on in the stock market? Any predictions on the stock market?

JONES: None whatsoever. I just think it's in a sideways trading pattern. High tech stocks still have to hit bottom. They're getting close, I think. But I don't see any real hope. It's a low return market as I look ahead, even into next year.

GHARIB: OK, thank you very much for sharing your thoughts with us tonight.

JONES: Thank you.

GHARIB: We've been speaking with David Jones of Aubrey Lanston.

Stock prices are as of 4 p.m. close on NYSE, NASDAQ and AMEX.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc.

PAUL KANGAS: The governors of 42 states today asked Congress for the power to develop a simplified system for collecting sales tax on Internet sales. Congress will consider extending its current moratorium on Internet taxes next month. Darren Gersh looks at what's at stake.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: When it passed a moratorium on Internet taxation three years ago, Congress feared new taxes might strangle a new technology called the Internet. But now, many of the nation's governors worry the Internet is choking off state revenues as consumers use e-commerce to avoid paying sales taxes.

GOV. MICHAEL LEAVITT, R- UTAH: We're all being hurt by the fact that there are taxes that are currently being devoted to our schools and to roads and law enforcement that are owed but not being collected.

GERSH: Congress is now considering extending for five years the moratorium on taxes to access the Internet and any other tax that discriminates against e-commerce. But 42 governors are now asking for more. In a letter released today, they are calling on Congress to amend the moratorium and authorize states to develop a nationwide system to streamline and simplify the collection of sales taxes.

LEAVITT: We believe that the sales tax system in this country is a mess and we have a plan to fix it and we're simply asking Congress, in addition to extending the moratorium, that they deal with the longer term, more complicated issues and allow us to fix them.

GERSH: The Supreme Court has ruled a state can collect sales taxes from a business selling over the Internet, but only if the company has a physical location in the state. Industry groups say the governors are looking for a loophole.

HARRIS MILLER, PRESIDENT, INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA: And what they are trying to do is to get around that Supreme Court ruling and have special taxes imposed on purchases on the Internet.

GERSH: Industry groups say the governors have been trying for three years but have failed to come up with a plan to simplify sales tax collections. But the governors say Congress shouldn't put this issue off for another five years.

MICHAEL MAZEROV, SENIOR ANALYST, CENER ON BUDGET AND POLICY: Governors are reading the political tea leaves and basically see that this is their last best opportunity for some considerable amount of time to get Congress to solve this problem.

GERSH: A slowing economy is already straining state budgets and by 2003 it is estimated state and local governments may lose $20 billion in tax revenues to sales over the Internet. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

Stock prices are as of 4 p.m. close on NYSE, NASDAQ and AMEX.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc.

SUSIE GHARIB: In tonight's commentary: getting to the real issues behind the Medicare debate. Here's Paul Krugman, Op-Ed Columnist for the "New York Times" and author of "Fuzzy Money."

PAUL KRUGMAN, COMMENTARY: Recently, medical researchers discovered an amazing new treatment. Someone who receives this treatment at the age of 65 will stay healthy and active for 30 years. But it's expensive. Most people couldn't afford to pay for it themselves. And to provide it to every American would cost about five percent of GDP. Should we cover the treatment under Medicare, which will require higher taxes? Or should we leave the treatment uncovered, which will mean that only the affluent can afford a long and healthy life? OK, I made all of that up. There isn't a treatment like that, not yet. But my little fable gets at the essence of the medical dilemma that our society will face over the next few decades. Never mind Social Security. That's a fake crisis manufactured by ideologues. But Medicare faces a real crisis. Because of new medical technologies, experts expect the cost of Medicare to rise by about five percent of GDP over the next 50 years. If you think there are easy answers to this trend, you aren't paying attention. We're talking about a lot of money, enough to give even a big spending liberal pause. On the other hand, a knee jerk free market response misses the point. Are we really willing to let money be the difference between life and death? The future of medical care ought to be the great budget and political issue of our time. I wish I believed that any of our politicians will address that issue honestly. I'm Paul Krugman.

Stock prices are as of 4 p.m. close on NYSE, NASDAQ and AMEX.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc.

SUSIE GHARIB: And finally tonight, a look at a Massachusetts company that's bringing new meaning to the phrase flex time. Mont Fennel reports on Tech Target.

MONT FENNELL, NIGHTLY BUSINESS REPORT CORRESPONDENT: Imagine coming to work any time you want to and leaving any time, or taking as many weeks of vacation as you would like. Actually at Tech Target you determine how many hours you work and how many days you want off.

GABRIELLE DeRUSSY, SALES DIRECTOR, TECH TARGET: Basically it means you manage yourself.

FENNELL: At Tech Target, worker's schedules are not put under a magnifying glass. What matters is what you do, not when you do it.

GREG STRAKOSCH, CEO, TECH TARGET: Because at the end of the day we're going to judge people on their results, not what time they show up for work, not what time they leave.

FENNELL: Tech Target creates Web sites which provide I.T. manager s with the latest news and technology. Workers have calendars but managers don't keep track of how much time off you give yourself. The only clocks in the building are on your computer screen. Gabrielle DeRussy used to punch the nine to five clock at a big Boston bank.

DeRUSSY: It just didn't make sense because it, they weren't using me to my fullest potential.

FENNELL: Lisa Johnson says she takes three to four weeks vacation per year. The flexible work schedule allows her to balance home life with a 3-year-old and it benefits the company.

LISA JOHNSON, MARKETING VICE PRESIDENT, TECH TARGET: But if I couldn't call in and say my daughter is sick, then I would have to call in and say I'm sick, right, and then my company would lose a whole day of productivity from me because I wouldn't do any work.

FENNELL: Indeed, the company's CEO, who sits at a regular desk like everyone else, says that the open leave policy has helped the business grow exponentially. In less than two years, Tech Target has gone from producing three Web sites to 23 and now has 500 advertisers like IBM (IBM) and Intel (INTC). Last year's revenues of $7 million are expected to nearly triple to $20 million this year, partly because employees are given so much freedom.

STRAKOSCH: This culture definitely contributes because we have very high morale, very high productivity, very high commitment to the company.

DeRUSSY: I will go the extra yard for a company that's going to reciprocate.

FENNELL: Meanwhile at Tech Target, choosing how much time you take off from work is not like throwing darts at a random target. Even though employees can get as much time off as they want to, officials estimate that the average worker takes only two weeks vacation and puts in 50 to 55 hours a week.

STRAKOSCH: We've got a team full of experienced professionals that understand profit and loss, and that's what this company is about, is making money.

FENNELL: Tradition here is to ring this bell when a new sale comes through. At Tech Target, free time is money. Mont Fennell, NIGHTLY BUSINESS REPORT, Needham, Massachusetts.

Stock prices are as of 4 p.m. close on NYSE, NASDAQ and AMEX.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc.

PAUL KANGAS: Stocks opened modestly lower on Wall Street, partly due to some carryover selling from last Friday's steep sell-off which sent the Dow down 151 points, or 1.5 percent, and the NASDAQ Index down 63 points, or 3.3 percent. Of course, another negative was the reluctance of many investors to buy much ahead of tomorrow's Fed meeting on interest rates. At 10:00 a.m., then, the Dow was off 22 ½ points. NASDAQ Index 6 points lower. After volume trailed off during the opening downturn, a little reflex rally developed and it was helped along by the release of better than expected earnings from Lowe's (LOW) and an update outlook from Toys R Us (TOY). The tech sector however was subdued by the Lehman Brothers downgrade of CIENA (CIEN) stock. At noon time, the Dow moved to a 46-point gain but the NASDAQ Index was up only 4 points. Amid growing optimism that the Fed was sure to cut interest rates by at least ¼ percent tomorrow, the market improved slowly but steadily in afternoon trading. The Dow Jones Industrial Average went on to close at its best level of the session with a gain of 79.29 putting it at 10,320.07. The NASDAQ Index picked up 14 1/3 points ending at 1881.35.

Big board volume disappointing on the rally, 876.4 million shares, well below last Friday's pace. About a 4 to 3 ratio of up volume over down volume, not particularly impressive.

The Dow Transports up 15.77.

Utility Index up just over 2 points.

And the Closing Tick decidedly bullish at +882.

Standard & Poor's 500 up nearly 9 1/2 points.

A gain of 5.13 in the 100.

The MidCap 400 gained just over 1 1/2.

Bridge Futures Price Index down a rather hefty 2.39.

Almost a 4 point gain in the New York Composite Index.

1 1/3 point rise in the Value Line.

Russell2000 Small Cap Index gained 3.22.

Broadly based Wilshire 5000 up exactly 77 1/2 points.

After last week's solid rally in anticipation that the Fed will cut rates at least 1/4 percent tomorrow, the bond market was hit by profit taking today, especially on news that the index of leading economic indicators rose 0.03 percent in July. That was its fourth straight advance, suggesting the economy may be in for better times ahead. Some weakness could also be linked to the rally in stocks, which siphoned some funds away from debt securities.

Tax-free and corporate issues fell 3/8- to 1/2-point on average and the Treasury market closed broadly lower.

5-year notes dropping 8/32.

The 10-year note down 17/32, bringing the yield back up to 4.91 percent.

30-year bond down 18/32.

And the Lehman Brothers Long-Term Treasury Bond Index off about 7 1/3 points.

Bargain hunters this afternoon kind of gave the Dow a nice run-up and we see a closing gain of nearly 80 points in the Dow Industrial Average. The broader market nicely higher, a 17 to 13 positive ratio; 184 new yearly highs, only 60 new lows.

Topping the active list on 13.3 million shares, Lucent Technologies (LU) edged up $0.11.

Followed by Nokia (NOK), up $0.17.

Then Pfizer (PFE) down $0.34.

Citigroup in there with an $0.80 per share gain.

And then, look at this, the NASDAQ Cubes (QQQ) in there, fifth in volume now on the big board, up $0.52.

And Ford Motor (F) lost $1.30. Now, first of all, Merrill Lynch downgraded it from "accumulate" to "near term neutral." First Boston and UBS Warburg cut earnings estimates and, of course, Friday Ford itself cut its own 2001 earnings estimate from the Street level of $1.20 down to $0.70 a share.

General Electric (GE) moved up $0.73.

Exxon Mobil (XOM) a $0.27 gain. September oil futures in New York up about $0.50 a barrel.

Johnson & Johnson (JNJ) moved up $1.10. The company received FDA approval for its new painkiller called Ultracet.

And then Motorola (MOT), 10th in volume, down $0.44.

Agilent Technologies (A) down $0.36. After the market close, Agilent posted a third quarter loss of $0.24, nowhere near as bad as the Street's estimate of a $0.35 loss. But Agilent said it's going to cut 4,000 jobs or nine percent of the workforce. In after hours trading, the stock was as low as $23.75.

Best Buy (BBY) moved up $0.12 even though "Baring's" lead columnist Allan Abelson was very wary about the 28 price earnings multiple for this consumer electronics retailer. The stock still moved higher.

General Motors (GM) down $3.47. Goldman Sachs cut 2001 and 2002 earnings estimates by $0.65 and $0.60 a share respectively.

Lowes Companies (LOW) up $2.80. As I mentioned, the company in with second quarter earnings higher than expected by a $0.01, $0.42 versus last year's $0.36, and it sees third quarter sales up 20 percent.

Toys R Us (TOY) up $1.62. The company reported a second quarter loss of $0.15 a share but it's comfortable with 2002 Wall Street estimates on its earnings. Tucker Anthony Brokerage issued a "buy."

And Visteon (VC) down $1.19. J.P. Morgan downgraded it from "long-term buy" to just "market perform." This is a major auto parts supplier to Fed.

Montana Power (MTP) the big percentage gainer of the day, up $1.50. Positive mention in this week's "Baring's" financial magazine, saying the company's reorganization will put it in a good cash position and the stock will be at an attractive price.

Krispy Kreme Doughnuts (KKD) up $3.47 after the Alex Brown Brokerage repeated a "strong buy."

Triad Hospitals (TRI) up $2.25. S.G. Cowen Brokerage issued a "strong buy" on that stock.

Enterasys Networks (ETS) down $3.86. Morgan Stanley downgraded it from "outperform" to just "neutral."

American Axle (AXL) bearing the brunt of the selling going on in the auto sector, off $2.60 there.

And then we see Korn Ferry International (KFY), that's a head hunting firm, the company's going to take an $86 million charge that is related to the 20 percent cut in its workforce. The company sees a first quarter loss of $0.05 to $0.08 a share. Wall Street was expecting earnings of $0.13.

NASDAQ trading, a 14 1/3 point gain in the Index, but volume disappointingly low and below last Friday's level. 18 to 17 positive advances over declines.

Microsoft (MSFT) topped the active list, up $0.82.

Intel (INTC) edged up $0.13.

Dell Computer (DELL) down $0.28.

Cisco Systems (CSCO) was up $0.29.

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