Wall Street report: Friday close

MARKETS capped their worst week since the terrorist attacks of last September with yet another sell-off. The Dow Jones Industrial Average closed down 117.00 points or 1.33% to 8684.53, down 7.4% on the week. The Nasdaq Index, which had spent much of the day in the black, finished off 0.94 points to 1373.49 to bring its losses for the week to 5.2%.

Figures out from the University of Michigan showing its index of consumer sentiment registering its biggest decline since September helped spark the selling. The index dropped from 92.4 in June to 86.5 this month, well short of the 93 expected. Economists said the slump in consumer confidence was due in part to the crisis in confidence on Wall Street and thedrumbeat of job lay-offs.

The Wilshire Total Market Index, the widest measure of US share market value, has dropped $2,500bn since 1 January and $7,000bn. since March 2000. But what worries economists most immediately is that the consumer could cut spending plans in the future, curtailing the widely-anticipated recovery in the US economy.

'If there was any doubt that the equity carnage and renewed terrorism fears are taking a heavy toll on consumer sentiment, it was removed by the plunge in the Michigan index,' said Peter Buchanan, economist at CIBC World Markets.' The report raises more red flags about consumer spending at a time when the outlook for business investment remains cloudy.'

But some Wall Street watchers say that the negativity has been overblown and that company profits should recover with the forecasted economic improvement later this year. 'It's become the flip side of the recent past,' said Ned Riley of Boston investment firm State Street Research. 'We've seen irrational exuberance and now we have irrational fear. I think this is all part of the bottoming process.'

Some investors appeared to subscribe to that theory as buying emerged in beaten down sectors for the second straight day. Techs firmed early before turning mixed. An upbeat assessment of its prospects from Dell Computer helped. Dell shares leapt $1.05 or 4.4% to $24.98. Cisco Suystems climbed 33 cents or 2.4% to $14.38. Intel lost an early gain to close lower by 26 cents or 1.4% to $17.99.

General Electric, vying with Microsoft for the title of the world's biggest company by market value, helped steady nerves before the opening of trading when its quarterly report came in as expected. GE shares rose $1.25 or 4.6% to $28.60. Microsoft slid $1.05 or 2% to $51.86.

Duke Energy, the country's second biggest power utility, tumbled $3.20 or 11% to $24.75 after it said it had been asked for documents as part of an official investigation into energy trading. AOL Time Warner came off 56 cents or 4% to $13.14 as it confirmed it was looking to replace chief operating officer Robert Pitmman as the interim head of its struggling AOL subsidiary.

Home Depot, then do-it-yourself chain and a Dow component, slumped $2.31 or 7.4% to $29.09 as at least one broker voiced doubts over its outlook. Wal-Mart was marked down $1.33 or 2.5% to $52.85 despite official retail figures out showing a bigger than expected increase of 1.1% last month.