Wall Street report: Friday close

A REMINDER that the American economy is still mired in recession stopped bulls in their tracks. Markets dropped on figures showing unemployment rising to a six-year high. The Dow Jones Industrial Average, up 20% from September lows on hopes that the US economy will rebound early next year, slipped 49.68 points or 0.49% to 10,049.46. The Nasdaq Index, up 7.8% in just the past two sessions and having climbed 40% from its September lows, settled back 33.02 points or 1.62% to 2,021.25.

Labor Department Secretary Elaine Chao, releasing the jobless report for November, said America was still 'feeling the tremendous jolt' from the terror attacks of 11 September. 'Obviously, this report is not good news,' she said. The US unemployment rate rose to 5.7% from 5.4%, losing a greater than expected 331,000 jobs as company redundancies accelerated. Bill Sullivan, senior US economist at Morgan Stanley, said the data provided more ammunition for the Federal Reserve Board to cut interest rates again when it meets next week. 'This report shows the economy is still struggling,' he said. 'It's my opinion that this economy may have more downside risk ahead.'

Investors have been betting that the economy will turn early in the New Year. Peter Coolidge, senior equity trader at investment firm Brean Murray & Co., said the latest data might make them more cautious. 'It just reinforces the idea that we're still in a slowing economy with signs that there might be a recovery around the corner,' he said. 'It's probably not what the bulls were looking for to continue this rally.'

The University of Michigan index of consumer confidence did offset gloom from the jobless figures somewhat. Its index rose to 85.8 from 83.9, the third straight gain and an indication that Americans are feeling less stressed about their jobs and the general economic outlook.

Techs, which have been on a torrid run, backed off for the most part. Sun Microsystems, which on Thursday said its sales were on track in the current quarter, fell 80 cents or 5.7% to $13.35. Intel, which has soared 67% in the past two months, backed off 92 cents or 3.7% to $33.24 despite a rosy presentation out late on Thursday. Rival chipmaker Advanced Micro Devices jumped $1.60 or 13.6% to $18.46 as it issued an upbeat report. Cisco Systems, with its per earnings ratio approaching 160, was marked down 14 cents or 0.9% to $17.85. Microsoft dipped 82 cents or 1.2% to $67.83 as nine US States asked a court to strip the Web browser Internet Explorer from the world's biggest software company.

AOL Time Warner slid $1.77 or 5% to $32.98 after Merrill Lynch lowered its profit forecasts for the media giant. Enron, the energy trader which declared bankruptcy at the weekend, rose 9 cents or 13% to 75 cents. JP Morgan Chase, a lead lender to Enron, retreated 62 cents or 1.5% to $39.76. Oil drilling and services company Halliburton plunged $8.85 or 42% to $12 after it said a court had awarded $30m. to plaintiffs in an asbestos exposure case.

Among Dow components, Alcoa fell 64 cents or 1.6% to $38.91, AT&T lost 40 cents or 2.2% to $17.68, General Electric shed 61 cents or 1.6% to $37.15 and ExxonMobil rose 74 cents or 2% to $38.07.