Wall Street report: Friday close

SHARES slumped after Federal Reserve Board chairman Alan Greenspan said he saw 'significant risks' to an economic recovery in the US.

The Dow Jones Industrial Average slid 80.33 points or 0.80% to 9,987.53, down 2.6% on the week. The Nasdaq Index closed out the week down 1.8% after falling 24.78 points or 1.21% to 2,022.46.

Greenspan left the door open to a 12th. straight interest rate cut when the Federal Reserve meets in two weeks, news that normally would be taken as a positive by investors. But he sounded less than certain that a US recovery had taken hold or that it would be robust or last very long.

And he had a sober word about share market levels as well. 'Although stock prices recently have retraced a portion of their earlier losses, the restraining effects from the net decline in equity values presumably have not, as yet, fully played out,' Greenspan said. 'Future wealth effects will depend importantly on whether corporate earnings improve to the extent currently embedded in share prices.'

This week's market pullback has come after shares ran up on investor confidence that a profit rebound would come in the first half of 2002. But Greenspan was careful to point out that 'profit margins are still under pressure,' a factor which could, in turn, limit corporate profitability and act as a brake on share prices, at least in the short run.

The Fed has been aggressively cutting interest rates for the past year to combat a recession which began officially in March.

Ford Motor's widely expected announcement of job cuts had little effect on general market sentiment. The company's chairman and chief executive William Clay Ford Jr. outlined plans to cut 35,000 jobs, 13,000 of them overseas, and close several plants over the next decade. The re-structuring would result in a charge to the number two carmaker of $4.1bn.

'We strayed from what got us to the top of the mountain, and it cost us greatly,' he said in a presentation televised to the company's 345,000 employees world-wide.

Ford shares reversed an early loss to close up 21 cents or 1.4% at $15.50. General Motors, which has been trying to capitalise on its old rival's woes, fell 30 cents or 0.6% to $49.77.

Shares in Enron, the bankrupt energy trader, remained halted at 67 cents, down from $80 a year ago, as it was announced that UBS had won the bidding for its trading business. No price was disclosed. Enron, which collapsed last year, is the target of several investigations, including a criminal probe by the US Justice Department.

Cisco Systems dropped 79 cents or 2.8% to $20.21 on a magazine article suggesting that its accounting methods could be tightened.

Conglomerate Tyco International fell $2.72 or 5% to $52.20. After the close, the company issued a statement saying it was not bidding for Honeywell. Honeywell shed 56 cents or 1.7% to $33.25.

Data storage company EMC added 10 cents or 0.6% to $17.19 on media speculation that it could be a takeover target for IBM.

Among Dow components, Walt Disney slipped 42 cents or 1.9% to $21.87, Microsoft dipped 67 cents or 1% to $68.61 after a judge blocked a proposed settlement to civil lawsuits against it and Wal-Mart shed $1.20 or 2.1% to $55.80.