Beige Book Turns ‘Em Red On Wall Street

Tech stocks fell hard, gaining speed after breaking through the psychologically significant 2000 level. A Federal Reserve report indicating continued economic weakness in the U.S. economy dashed any lingering hopes of a quick recovery for corporate profits.

Meanwhile, frustration is building on The Street as the Nasdaq dips back to test Julyis lows. If support in the 1950 area breaks down expect a trip back towards Aprilis low of 1673 for a retest of that support level.

According to the Wall Street Journal, todayis beige book report, "depicted an economy in the grips of islow growth or lateral movementi with sluggish retail sales and further declines in manufacturing." The Fed report is based on anecdotal data collected in the six weeks before August 1st.

Many students of past recessions are closely watching the retail and manufacturing sectors for signs of declining consumer spending, which accounts for about two-thirds of all economic activity in the U.S. Typically, corporate layoff early in a recessionary cycle generate declining consumer confidence by midway through the cycle, reinforcing the spiral downward with declining retail sales, leading to yet more layoffs in manufacturing. Itis the Federal Reservesi mandate to break this feedback loop by loosening monetary policy sufficiently to jump start the economy back towards a healthy level of growth.

The beige book report found retail sales generally to be, "sluggish and frequently below expectations, despite substantial discounting on a wide range of consumer goods." Orders for back-to-school and Christmas inventory are lower than expected.

Unemployment remains at 4.5% in July. Many economists are predicting it will peak at 5% sometime later in the year.

Adding to the grim atmosphere on Wall Street, Cisco System (CSCO) said that its sales are down 36% from January and have yet to bottom. Cisco warned that it expects the current quarteris sales (ending in October) to be off by as much as 5% from the previous quarter. Cisco stock fell 1.28 to 17.98

Appleis stock lost 0.35 to 18.90 on weak volume of 4.8 million shares trading hands. One of the reasons Appleis stock is doing so poorly since Mac World is the companyis dependence on consumer sales, which by all indications is likely to continue to weaken in the months ahead.

The Nasdaq lost 61 points (-3.03%) to close at 1966.36, on volume of 1.6 billion shares trading hands.

The Dow lost 165 points (-1.58%) to close at 10293, on volume of 1.1 billion shares.

The S&P 500 lost 20.87 points (-1.73%) to close at 1183.53

Adobe lost 0.36 to 34.06.

Akamai lost 0.51 to 6.89.

IBM lost 1.92 to close at 104.19.

Macromedia lost 1.43 to close at 15.50.

Motorola lost 0.28 to close at 18.32.

Dell lost 1.07 to close at 26.64.

Gateway lost 0.11 to close at 11.09

Compaq lost 0.38 to close at 14.60.

Intel lost 1.01 to 29.61. The semiconductor index ($SOX) broke through its 200-day moving average, to close at 584.

Microsoft lost 1.49 to close at 64.86.

You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Appleis financial dealings.

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