SUSIE GHARIB: Wall Street just couldn't shake off the blahs. The Dow rose almost 36 points after being down more than 100. The NASDAQ fell 12. Investors were hesitant once again about taking any big steps, given the uncertainty in the economy and the poor outlook for earnings. Just how bad is the profit picture? Here's Suzanne Pratt with some answers.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The end of the third quarter is still a month away, but already Wall Street is bracing for puny profits. For weeks now, corporate America has been sounding alarms about the dismal state of its balance sheets. There have already been 383 negative pre-announcements for the current quarter, just shy of where we were at this time in the second quarter.

CHUCK HILL, RESEARCH DIRECTOR, FIRST CALL: Clearly we're running up there in record territory. Whether we set a record or only come close to it, we're still going to be at well above normal rates.

PRATT: Analysts are forecasting a 14 percent decline in third-quarter earnings for the S&P 500, making it the third straight quarter of falling profits. So although the economy isn't in recession, corporate America is in the midst of an earnings recession. No place is that more evident than in the technology sector, where the earnings picture has gone from bad to ugly. Technology is expected to be this quarter's worst performer, earnings down 68 percent, though some warn they will likely be lower. The outlook is also gloomy. Already analysts are predicting a decline of 42 percent for the sector in the fourth quarter. And for the first quarter 2002, tech earnings are expected to be up only 4 percent, a sharp drop from the 32 percent increase forecast back in July.

EDWARD KEON, QUANTITATIVE ANALYST, PRUDENTIAL SECURITIES: We've lost 28 percentage points on the expected growth for technology in the first quarter in just two months. If that continues, that could pull the whole aggregate number down.

PRATT: As for whether the stock market has already priced in disappointing news on the earnings front, some experts say not entirely.

KEON: My guess is the market realizes the third quarter is going to be bad for earnings, especially for tech. But I think that they don't quite realize that next year's rebound, especially for tech, is not going to be as robust as the market thinks right at the moment.

PRATT: Confession season for corporate America will heat up towards the end of September, and the actual earnings reports will flood Wall Street by the middle of next month. Suzanne Pratt, "NIGHTLY BUSINESS REPORT," New York

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

PAUL KANGAS: What a difference a few months makes. When Congress went on vacation at the beginning of the summer, the budget was forecast to be well in the black. Now Congress is back to work. But as Darren Gersh reports, the budget is tight and likely to spark a battle that lasts well into the fall.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: It is as if Democrats and Republicans are talking about two different worlds. In his first testimony since new estimates show a dwindling surplus, the president's budget director told Congress that as long as other spending is kept in line, there is enough money for defense, education, and other priorities.

MITCH DANIELS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: It so happens that by doing that, we believe the nation's needs can be met.

GERSH: But Democrats see a world of red ink and broken promises.

SEN. BYRON DORGAN, (D ) NORTH DAKOTA: The American people and Wall Street understand the current plan doesn't add up. It is full of fuzzy math. It doesn't hold together.

GERSH: Given the deep divide, no one is predicting a quick or easy end to this year's budget battle. Most analysts predict action on a Medicare drug benefit will be pushed off for another year as Republicans and Democrats are deeply divided over the basic design of the program. On education, Senate Democrats want to increase spending $16 billion, the president by $1 billion. Both parties are talking about increasing aid to farmers by $2 billion next year. The president is also pressing for an $18 billion increase in defense spending in 2002. But all that spending clearly will not fit into the remaining $2 billion non-social security surplus. Both parties may say they want to avoid it, but analyst Tom Gallagher expects they will end up tapping the Social Security trust fund.

TOM GALLAGHER, WASHTINTON ANALYST: I think that politicians will find some way to rationalize dipping in to the trust funds, because they used them up every year up until 1998. They've been practicing kind of easy virtue since then, and now that it has gotten hard, I think they'll find some way to deal with it

GERSH: Congressional Republicans are also pushing a two-year cut in the capital gains tax to spur the economy, but with budget numbers as tight as they are, even the White House is cool to that idea. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

SUSIE GHARIB: Here's a question, have you listened to music on the radio recently? With the growing popularity of CDs, MP3s and music videos, there's a good chance the radio is way down on your list of entertainment choices. But the radio industry wants to change that. And as Quinn O'Toole reports, it's rolling out new technology in hopes of keeping listeners, especially younger listeners, tuning in.

QUINN O'TOOLE, NIGHTLY BUSINESS REPORT CORRESPONDENT: WHFS has been playing rock and roll in Washington, D.C. for more than 30 years. And while the music has definitely changed, the techniques for keeping listeners tuned in have not.

RADIO ANNOUNCER: Let's go to the phones. 1-800-321-WHFS. What's up?

RADIO LISTENER: Hi, could I hear-

O'TOOLE: But General Manager Phil Zachary says he's starting to sense his listeners are getting restless.

PHIL ZACHARY, GENERAL MANAGER, WHFS-FM: Years ago when someone called a radio station and they had a request they said, you know, I'd like to hear this song. If you have a chance, could you play it for me? Now they're calling in and want to know why you won't play it right now.

O'TOOLE: Zachary blames the attitude, at least in part, on new technologies like the Internet. They have conditioned young consumers to demand what they want when the want it, for free.

ZACHARY: And when something starts to connect, it's all over the Internet. It's downloaded thousands, if not millions of times a week. And it's created a more demanding, more discerning active music listener.

O'TOOLE: So the challenge now is to keep younger listeners tuning in and older listeners from drifting away to new services like satellite radio. Many of broadcasting's biggest names, including Clear Channel (CCU), Cox (CXR), ABC and Infinity (INFY), which owns WHFS, together have invested $100 million in a company called Ibiquity that's developing digital A.M. and F.M. radio.

BOB STRUBLE, PRESIDENT AND CEO, IBIQUITY DIGITAL: The F.M. will sound like CDs. A.M. will sound like F.M. And all the annoying interference you get driving around town, the pop, the static, the hiss is all eliminated because of the digital processing.

O'TOOLE: But Ibiquity says digital won't just update radio's sound, it will update radio's look, too.

STRUBLE: Bits are bits and when bits are transmitted over the air, they can be audio and they will be audio. But there's also enough bits left over to begin to transmit data.

O'TOOLE: Enough data, Ibiquity says, to produce a graphic display similar to this demo. It delivers information about the music that's playing, news and traffic, as well as something commercial radio is infamous for, commercials. Unlike television, radio broadcasters won't have to replace all this transmission gear or change frequencies to go digital. The digital audio and data will be compressed and sent out with the existing analog signal so you won't have to buy a new radio. A new digital one will cost about a hundred bucks. Ibiquity is currently running field tests on the technology. It expects final approval from the FCC soon. The first digital radio broadcasts are slated to be on the air in selected cities early next year. Receivers should be in stores soon after that. But not everyone in the industry is convinced a digital revolution is what radio needs. Jerry Del Calliano has been in the radio business for more than 30 years. He agrees the technology is important, but he doesn't think going digital will solve what he says is radio's big problem young listeners aren't interested in the programming.

JERRY DELCALLIANO, PUBLISHER, INSIDE RADIO: Improving technology when your content is the problem and when a major sociological change has taken place-AOL, e-mail, Napster, oh, we have to be nuts.

O'TOOLE: Back at WHFS, General Manager Phil Zachary agrees that content is what keeps his listeners tuned in. But he says the ability to market his station as all digital will help.

ZACHARY: When you're frequently mentioning this on a radio station four or five times an hour for weeks and weeks at a time, I think it can make a difference. Will they actually be able to tell? I don't know.

O'TOOLE: Still, broadcasters are betting that digital radio will help them hang on to their listeners as the buzz from other technologies grows stronger. Quinn O'Toole, NIGHTLY BUSINESS REPORT, Columbia, Maryland.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

SUSIE GHARIB: A special type of mutual fund is celebrating a special anniversary this year and tonight's Money File commentator says it should be a special part of your portfolio. Here's John Waggoner, Mutual Fund Columnist for "USA Today."

JOHN WAGGONER, MUTUAL FUND COLUMNIST, USA TODAY: Normally, when you hear the words revolutionary and investment together, you should run away as fast as you can. Most revolutionary investments involve things like weasel ranches in Tasmania and they never pan out. But 25 years ago, a quiet revolution in mutual fund investing began in Valley Forge, Pennsylvania. The fund industry has never been the same. The notion was this, since many mutual fund managers don't beat the Standard & Poor's 500 stock Index, why not just throw the rascals out and duplicate the Index? And so the Vanguard 500 Index Fund was born. The fund is now the first or second largest mutual fund, depending on how you count its share classes. It has spawned dozens of similar index funds, including several that are sold on the stock exchanges. In the past 10 years, it has beaten not only the average large company stock fund, but the average stock mutual fund, period. Index funds have two advantages. First, they charge very little for their services, typically, between 0.1 or 0.2 of a percent a year. Most funds charge about a percentage point a year. Now, it's hard enough to beat the S&P 500. Beating the S&P 500 when you're giving up a point in expenses each year is very hard, indeed. And because they eliminate managers, index funds eliminate managers' mistakes or managers' changes. What are the drawbacks? What are the drawbacks? Well, you won't beat the S&P 500 with an index fund, because you'll still pay expenses. Indexing hasn't been quite as effective for foreign stocks or small company stocks. And there will always be funds that beat the index. But with an S&P 500 Index fund, you'll get a revolutionary investment that will probably beat the average large company stock fund and you won't have to handle a single weasel. I'm John Waggoner.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

PAUL KANGAS: Wall Street's blue chip stocks opened lower today in an extension of yesterday's late sell-off, which slashed a 212- point advance in the Dow Jones Industrial average to a closing gain of only 47 points. At the outset of trading, the Dow fell as much as 67 points while the NASDAQ Index was down only 10 points. Then came a technical rebound, which lifted the Industrial average to a 52-point gain at 10:00 AM when the NASDAQ index posted a seven-point gain. The tech sector led the market lower for the rest of the morning and into mid-session after investors continued to show disappointment over Hewlett-Packard's (HP) plan to acquire Compaq (CPQ) as both stocks extended yesterday's losses. Another negative was a downgrade on Motorola (MOT) by Merrill Lynch. By 1:30 this afternoon the Dow fell to a 90-point deficit. NASDAQ Index was Down 48 points. The market began to improve after UBS Warburg upgraded a number of major brokerage stocks, like Goldman Sachs and Merrill Lynch. Then late in the session, Microsoft (MSFT) helped bolster the NASDAQ market and the Dow by re-affirming its financial guidance for the current fiscal year 2002. The Dow Industrial average managed to post a closing gain of 35.78 points putting it at 10033.27 above 10000 again.

The NASDAQ however, closed down 11.77 at 1759.01.

We see volume today 1.3 million shares moving up on that late rally, hopefully but down volume still exceeded up volume by a 9 to 4 ratio.

The Dow Transports Index was down .48.

Utilities down 4.62.

The Closing Tick slightly bullish at +442.

Standard & Poor's 500 fell 1.20.

The S&P 100 edged up .85.

But the MidCap 400 down nearly 6 points.

The CRB Bridge Futures Price Index edged up .04.

A loss of just over a point on the New York Stock

Exchange Composite Index

Value Line off just over 3 1/2 points almost a 4 1/2 point drop..

Russell2000 Small Cap and the Wilshire 5000 hardly moved at all. Down about 33 1/2 points, only .3 of a percent.

The bond market rebounded slightly following yesterday's sharp sell-off, which was triggered by new signs the US manufacturing sector is picking up. The report that second-quarter non-farm productivity was up 2.1 percent-not 2.5 percent, as first estimated, had little impact because it was expected, as was an upward revised 2.7 percent rise in unit labor costs.

With little else to go on, tax- free and corporates closed small fractions higher, as did most of the Treasury market.

A 2/32 gain in the 5-year notes

No gain here on the 10-year notes down just a 32nd however.

And the Bellwether 30-year bond up 3/32.

And the Lehman Brothers Long-Term Treasury Bond Index up 3 1/3 points.

We really had a bouncy day, all over the place with the Dow. But we finally wound up with a gain of 35 3/4 points. The broader market still lower by an 18 to 12 margin. And for the first time in many, many days, more new yearly lows than highs, 129 versus 95.

Compaq Computer (CPQ) topped the active list on 60 million shares, down another $0.67. It traded as low as $9.95.

And it's intended merger partner, Hewlett-Packard's (HWP) stock off another $0.66. It traded as low as $17, Wall Street giving a cold shoulder so far to this proposed merger.

Nokia (NOK) hit a new 52 week low, losing $1.15.

Tyco International (TYC) off $0.48.

Lucent Technologies (LU) down $0.27, fifth in volume.

AT&T Wireless (AWE) was off $1.05.

GE (GE) managed to gain $0.87.

NorTel Networks (NT) down $0.33.

Texas Instruments (TXN) fell $1.26. The company reaffirmed its third quarter outlook but that does include a 10 to 15 percent drop in revenues sequentially, so not the greatest news there.

And there you see it, AOL Time Warner (AOL) losing $0.75.

Alcatel (ALA) down $1.08. The chief executive thinks the company will show a profit in year 2001 but sees conditions in the market as challenging. That's a tough word, that challenging. And Merrill Lynch apparently thinks so. It downgraded the stock to "long-term neutral."

AngloGold Ltd. (AU) losing $1.19. It plans to offer, make an acquisition offer, that is, for Normandy Mining Ltd., which is Australia's biggest gold company.

And Diebold (DBD) down $3.62. Lehman Brothers downgraded it from "strong buy" to just "market perform."

And there you see Motorola (MOT) losing $1.09 after Merrill Lynch downgraded it from "accumulate" to just "near-term neutral."

National Semiconductor (NSM) losing $1.46. First Boston began covering the stock with a "hold" rating, just a "hold" rating because First Boston sees a very slow recovery for the company.

And Walgreen (WAG) moved up $0.49 after reporting August same store sales up a very respectable 11.6 percent.

Pope and Talbot (POP), the wood products company, up $1.29. The stock was added to the Standard & Poor's 600 Index after the close today. Obviously fund buying.

And then Gucci Group (GUC) up $6.88. Standard & Poor's says Francois Pinot, the French retail magnate, is poised to buy about a seven percent stake in Gucci for $95 a share. He'll be buying that stock from LVMH Moay Hennessey.

China Eastern Airlines (CEA) up $1.02, good percentage move. The company signed a deal to sell a 25 percent stake in its cargo unit to Taiwan's China Airlines. That seems to be a step toward breaking down the business barriers between China and Taiwan.

Oakley (OO) up $1.09. The company is increasing the number of Champs sports stores that carry its products from 370 to 500 of them. This is an attempt to make up for lost business when Sunglass Hut no longer distributes Oakley products.

Telesp Celular Participacoes (TCP), this is a Brazilian telecom company, down $3.67. Portugal Telecom (PT) has withdrawn its offer to buy the 58 percent of the stock it doesn't already own.

And AZZ Incorporated (AZZ), which manufactures electrical and tubular products, down $3.03. The company