SUSIE GHARIB: A grizzly day on Wall Street: stocks fell for the fourth session in a row, and the major market indexes are now at their lowest levels in 4 1/2 months. The Dow plunged 171 points, and the NASDAQ fell 51. The reason: more negative news on earnings, signs that consumers are spending less, and trouble for Microsoft (MSFT). We have two reports tonight looking at today's market action and the financial health of American consumers. We begin with Scott Gurvey on Wall Street.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Once more, the markets collapsed under the crushing weight of bad news. The Dow dropped 1.7 percent, closing below 10,000 for the first time since April. The NASDAQ lost 2.8 percent, ending the regular session below 1,800. Investors worried that consumer spending is softening. It rose a measly 0.1 percent in July. Personal income, with the aid of tax rebate checks, rose by 0.5 percent. Investors also took note of new layoffs at Charles Schwab (SCH) brokerage, bringing its workforce back to 1999 levels. Schwab says trading volume is down 50 percent. And also layoffs at Corning (GLW), which is cutting 1,000 fiber optics workers, citing a sudden slowdown in orders. Other tech turmoil was caused by reaction to Sun Microsystems (SUNW), saying it would miss revenue targets. And word that the European Union is opening new proceedings against Microsoft to determine if it is violating E.U. law by including its media player with the new Windows XP operating system. The Dow component's shares fell 5.5 percent. But some experts see positive signs in today's throw in the towel market attitude.

BERNADETTE MURPHY, CHIEF MARKET ANALYST, KIMMELMAN & BAIRD: We didn't truly get a testing of the lows of March and early April, and that's what we're experiencing now. And that is what creates the lows in a market. And this is the time when it takes courage, really, to invest. But it's sort of like, as a partner of mine likes to say, it's like growing a vegetable garden. You plant the seeds when the weather's not so great.

GURVEY: The experts also say investors are paying attention only to the negative news.

AL GOLDMAN, CHIEF MARKET STRATEGIST, AG EDWARDS: There's a lot of good news which is being ignored, such as yesterday the fact that GDP was actually up 0.2 percent rather than negative. And unfortunately, because people are in a "glass is half empty" attitude, they said, "oh, my gosh, we're only growing 0.2 percent," rather than saying we averted a recession.

GURVEY: To reverse the negative sentiment, many are looking for a leadership from the institutional investors. However, that, if it comes, is not expected until after the long Labor Day weekend. Scott Gurvey, "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.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Suzanne Pratt. In the last year, despite rising unemployment and falling stock prices, consumers have been doing what they do best: spending. And thankfully they have, because that spending has been a major reason why the economy has so far avoided recession.

STEPHEN SLIFER, CHIEF ECONOMIST, LEHMAN BROTHERS: You and I, as consumers, have been the only things that have been sort of keeping the US economy afloat. Consumer spending, it slowed a bit, but it's still growing and 2.5 percent-3 percent type rate.

PRATT: Lately, however, there's been growing concern that consumers will close their wallets, stay out of the malls, and prevent the economy from staging a recovery. Why? In part because all that shopping has meant Americans are deep in debt.

JOHN LONSKI, CHIEF ECONOMIST, MOODY'S INVESTORS SERVICE: A record debt can be viewed as a millstone that now weighs on consumer spending at a most inopportune time.

PRATT: According to the Federal Reserve, together consumers owe more than $7 trillion, nearly double what they carried in the last recession. And as the economy slows, credit card and mortgage delinquencies are on the rise. In fact, personal bankruptcy filings are up nearly 9 percent for the year ending June. To top it off, personal savings as a percentage of disposable income has been hovering around 1 percent for the last year, sliding from about 8 percent a decade ago. And the US savings rate is the lowest it's been since the great depression. But even with all the gloomy statistics, some economists are not particularly concerned about the vulnerability of consumer spending. They say personal balance sheets are in decent shape, especially when you consider that personal savings data do not include capital gains from stocks or appreciation of real estate.

SLIFER: We don't need to go putting away $100 out of every paycheck so much these days as we did a while ago because the stock market and our property values are doing the savings for us.

PRATT: Another factor that should help consumers cope with their mounting debt: lower interest rates. Although there's been little evidence so far, economists say lower rates will ultimately mean smaller interest payments on loans. 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.

08/30/01: The Impact of The European Central Bank Interest Rate Reduction

SUSIE GHARIB: The European economy also in the news today. The European Central Bank cut interest rates by a ¼ point as policymakers acknowledge that Europe's economic outlook had worsened. Joining me now to talk about the implications of this rate cut, Lakshman Achuthan. He's Managing Director of the Economic Cycle Research Institute, an economic forecasting firm in New York City. And nice to have you on the program.

LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: Good evening.

GHARIB: Well, you know, the European bankers have been criticized for quite a while for not acting aggressively to cut interest rates and now today, after all these months, they've finally cut by a 1/4 point. Is that going to help the European economy?

ACHUTHAN: Well, eventually. It's a step in the right direction and I think it's an acknowledgement of the situation we're in. We're in the midst of a global synchronized economic downturn that's pretty severe and Europe is included and today's action begins to recognize that inflation is just not the problem.

GHARIB: The European economies, I mean, we're talking Germany, France, Italy, all of them in serious economic trouble, and yet their situation, I guess, different than ours, that their Fed-

ACHUTHAN: Right.

GHARIB: -- has to come up with economic solutions for, that one size fits all.

ACHUTHAN: One size fits all. It's very, this is a test, actually, of this in that you can have a one size fits all policy with some of the larger economies like Germany actually contracting in the second quarter. At an annualized rate, you had a -.1 percent growth rate and some of the other smaller countries still growing. So it's difficult to see exactly how a one size fits all policy can work. But here no matter what they need to be stimulating the economy and I think they're taking a step in the right direction.

GHARIB: Well, do you think that this is the beginning of more easings?

ACHUTHAN: With that, the case for easing is very strong. There's no inflation pressures. The future indicators of inflation for Europe are headed directly down, just as they are in the U.S., and the indicators of growth have yet to turn back up. So from a policy point of view, it's clear the direction is down.

GHARIB: Do you think that this rate cut, and if there are future easings, in what way might they help the American businesses and the U.S. economy?

ACHUTHAN: Well, the first thing is in this global synchronized downturn these are tough to kick start up. We've had two in the post war period and they lasted for the U.S. economy 16 months long in 1974 and '81. So the U.S. Fed can't do it all alone. We need easings around the world. This is very, very important that this has begun in Europe.

GHARIB: Do you think that then synchronized economic easings will help the synchronized global slowdown?

ACHUTHAN: Yes, I do. Eventually it will. There are some interesting characteristics to this downturn, particularly the pullback in business spending, which is not as amenable to lower interest rates as, say, a pullback in consumer spending. You know, the lower interest rates in the U.S. have helped bolster the consumer so far this year and that's been a nice surprise.

GHARIB: A real quick question, as we look to see when this whole global economy, the worst will be over, what will you looking at as the key indicator to say it's bottomed?

ACHUTHAN: For the global economy I'd look at the "Journal of Commerce" Ecri (ph) Industrial Price Index. It's like taking the temperature of the global industrial economy. It's at a very low rate now. You have to see that turn up.

GHARIB: OK. Thank you so much for coming in and talking to us.

ACHUTHAN: Thank you.

GHARIB: My guest tonight, Lakshman Achuthan of the Economic Cycle Research Institute.

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.

08/29/01: "The Energy Crunch: Gridlock"- Encouraging Investments

SUSIE GHARIB: Power industry analysts say that there are bottlenecks in the nation's electricity transmission networks and one of the things that will ease those bottlenecks, money. As we wrap up our series Energy Crunch: Gridlock, Jeff Yastine reports that federal regulators are trying to encourage investment in the sector.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you want to put a finger on the pulse of the power grid, this would be a good place to start. It's the control room for ISO New England. ISO is short for Independent System Operator. Controllers for this non-profit entity manage the flow of electricity, buying it from competing generating companies and funneling it to local utilities and their customers across New England. With a glance at the huge control board, they can see what their power sources are, where the electricity is flowing and where potential bottlenecks might form.

There are a handful of these independent system operators across the country, all in states or regions where deregulation went into effect.

STEPHEN WHITLEY, COO, ISO NEW ENGLAND: Those were all, though, integrated, vertically integrated utilities who owned transmission, who owned generation and served the load all in one piece. With the advent of deregulation, generation was sold off to the market and to be dealt with on a competitive basis. The ISOs were created so you could have an independent entity to do that balancing and that reliability function to protect the interests of the customers.

YASTINE: In addition to those ISOs, there are dozens more groups, from rural electric coops to large utilities, that still control large sections of the nation's power transmission system. But the nation's networks of transmission lines are destined for even larger changes. The Federal Energy Regulatory Commission in Washington wants to consolidate the management of the transmission lines into four regional transmission organizations, or RTOs, one each for the north, south, east and western parts of the country. Federal regulators believe those regional transmission organizations would be a more efficient, centralized way of managing the grid. But it won't be easy. As one example, the northeast RTO would force four existing independent system operators controlling power in nine states to merge into one entity. The western RTO, as it's proposed, would span huge distances, from Nevada to the Canadian border. Not everyone thinks those regional systems would work.

LARRY OLIVA, PARTNER, ANDERSEN CONSULTING: There's a lot of emphasis on system operations as being the solution to solving the transmission bottleneck problem and that's not necessarily the case. And we worry about FERC sort of micromanaging the formation of these transmission organizations, which could result in problems that are difficult to foresee.

YASTINE: Others are hoping to jump start the investment process even before the final policy solutions are worked out. One firm, National Grid, recently said it will upgrade a 30-year-old of a major transmission line extending from this substation in the northeast. The upgrade could save up to $11 million in transmission costs, which National Grid says it would split between itself and the New England Independent System Operator. The proposal needs approval from federal regulators. But analysts say it's that kind of investment that's needed. The industry and regulators will need to develop a policy that encourages as much of it as possible.

Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.

KANGAS: Tomorrow, our Friday market monitor guest is Julius Maldutis, Managing Director of CIBC World Markets.

GHARIB: Hotel operator Extended Stay America (ESA) has a high profile new name at the inn tonight. Cascade Investment, this is the investment vehicle of Microsoft's Bill Gates, has taken a five percent stake in the firm. It's equivalent to almost five million shares but there's no word on when they were bought or at what price. Extended Stay runs more than 400 long-term lodging hotels. Its shares fell $0.39 today to $16.92.

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: Wall Street's blue chip stocks opened higher, but only enough to lift the Dow Industrial Average to a 14-point gain at 10:00 a.m. in a feeble technical rebound following the Dow's 332-point, or 3.2 percent tumble since the week began. The rally attempt was undermined by an early 15-point decline in the tech-laden NASDAQ Index, which was hurt by yesterday's post-market earnings and revenue warnings from Sun Microsystems and Corning, whose stocks fell some 20 percent at the outset of trading this morning. The sell-off worsened for the rest of the morning with more selling prompted by those consumer spending numbers we told you about. A barrage of brokerage downgrades and earnings estimate cuts on a wide variety of stocks also had a hand in sending the Dow to a 155-point, or 1.5 percent loss to the 9935 level at noontime, when the NASDAQ Index was down 55 points, or 3 percent. That breakdown below 10,000 Dow was a psychological negative, which kept the sell-off alive for the rest of the day. The Dow Industrial Average, after dropping a little over 200 points, however, did improve slightly by the final bell when it was down 171.32 points, or 1.7 percent, standing at 9919.58. The NASDAQ Index followed the blue chips lower, closing down 51.49, or 2.8 percent, at now at 1791.68, below 1800.

Big board volume picked up on the sell off. That's the second day of pick up on lower prices and no contest between down volume, over four times of the down variety.

The Dow Transports Index down just over 21 points.

Almost a 6 1/2 point loss in the Utility Index.

The Closing Tick neutral at +66.

Standard & Poor's 500 off over 19 1/2.

Nearly a 12 point drop in the 100.

The MidCap 400 off just over 6 points.

Bridge Futures Price Index fell 1.85.

A loss of nearly 7 ½ on the New York Composite.

4 1/2 point drop in the Value Line.

Russell2000 Small Cap Index off just over 5 1/4 points.

And the broadly based Wilshire 5000 tumbling almost 172 ¼ points or 1.6 percent, almost as much as the Dow.

The bond market felt the sting of considerable profit taking today despite the steep sell-off in stocks and that tiny rise in July consumer spending. It appeared that traders simply wanted to book some gains after the recent rally and before the long Labor Day weekend coming up.

As a result, tax-free and corporate issues closed down 1/8 to up to 3/8 of a point and the Treasury market ended lower across the board in light trading.

A loss of 5/32 in the 5-year note.

The 10-year note down 11/32.

And the 30-year bond dropping 13/32.

But look at here, a small gain of .01 in the Lehman Brothers Long-Term Treasury Bond Index.

Well, today makes four in a row and the last two on increasing volume on the big board. That's not very good news technically. The Dow off 171 1/3 points and just about twice as many decliners as advancers and the worst high/low ratio we've seen in a long time. Only 10 more new yearly highs than lows.

Lucent Technologies (LU) for the sixth consecutive trading session the most active issue today on 24 ¼ million shares, the stock down $0.50.

Nokia (NOK) hitting another low, down $0.83. It traded as low as $14.75 during the day.

AOL Time Warner (AOL) lost $2.55.

G.E. (GE) a loss of $0.41.

And then Corning (GLW) down $2.55. That was the biggest percentage loser on the New York Exchange and of course after the close yesterday, as we reported, the company cut another 1,000 jobs and it also cut its sales estimates for the rest of the year.

Pfizer (PFE) down $1.30.

EMC (EMC) fell $0.97.

Citigroup © dropping $0.92.

Solectron (SLR) a $0.15 loss.

And Motorola (MOT), 10th in volume, down $1.10, $1.11, let's make it.

AES Corporation (AES) down $2.94 on news it's offering $24 for 28 ½ million American Depositary Receipts of Nacional Telefonos de Venezuela (VNT). We'll see what that stock did in just a moment.

Coca Cola (KO) moving up $1.09. The company's going to buy or at least the speculation is it'll buy its biggest bottler in Germany. And incidentally, Coke was the big point gainer in the Dow Industrial Average today.

DaimlerChrysler (DCX) down $1.20. The company is cutting prices on its 2002 models already by about one percent.

And Dillards Department Stores (DDS) down $1.80. A second quarter loss of $0.24 reported after the close yesterday. That's versus a $0.01 in earnings the year before.

IBM (IBM) down $3.77. That was the Dow's biggest point loser.

And then Kyocera (KYO) gaining $2.50 on news the company plans to cut 10,000 jobs or 20 percent of its overseas workforce because of the worldwide information technology recession.

Sulzer Medica (SM) the big gainer percentage wise, up $1.29. A federal judge has ruled the company's proposed $700 million settlement with recipients of its faulty hip replacements may proceed in court as a class action.

And now we see Nacional Telefonos de Venezuela rising $3.92 on that AES offer for about 28 ½ million of these ADRs at $24. It looks like there's speculation they might bid higher.

E Trade Group (ET), the online brokerage, up $0.51 a share. The company set a restructuring. Yesterday it announced it's buying Dempsey & Company for $173 million in E.T.'s stock. Today, Alex Brown Brokerage upgraded this stock from "market perform" to "buy."

And Vector Group (VGR) up $2.25. The stock's been strong since last week when investor Carl Icahn (ph) disclosed he bought 1 ½ million shares at $32, increasing its stake to 6.4 million shares or 21 1/2 percent of the stock.

Spirent Plc (SPM), a British firm, down $1.25. The company's first half earnings this year same as last and it said it'll be, the results will be depressed in the second half by the difficult market conditions right now.

Universal Compression Holdings (UCO), a natural gas compressing company, down in reaction to the drop in natural gas prices.

NASDAQ trading, a 51 1/2 point loss in the Index. Trading volume picked up on the sell-off from yesterday. 12 stocks up for every 23 lower.

Microsoft (MSFT) topped the active list, off $3.31 on that news that the European Union intensifying its anti-trust probe.

Sun Micro (SUNW), you heard the bad news there, down $2.36.

Intel (INTC) fell almost a $1.

Cisco (CSCO) down $