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STOCK PRICES FLUCTUATE, BUT HOLD STEADY DESPITE REPORT

Stock prices fluctuated but were relatively steady Tuesday after a report that consumer confidence plunged following the Sept. 11 terrorist attacks.

The Conference Board said its consumer confidence index fell to 97.6 this month from 114 in August, the lowest reading since January 1996. The numbers are closely watched because consumer spending accounts for two-thirds of the economy.

Analysts said the bigger concern for the market is still weak corporate profits, which show few signs of improving soon because of the attacks.

"This figure tends to be more of an indicator of what people are feeling right now, rather than what will happen going ahead," said Will Braman, chief investment officer for John Hancock Funds. "We're more focused on companies and industries and what they're saying are the prospects for a turn in earnings."

At 1 p.m., the Dow Jones industrial average was off 19.79 at 8,584.07, following Monday's 368-point gain. The gain was a rebound from last week's 1,369-point plunge.

The Nasdaq composite index was up 2.13 at 1,501.53, while the Standard & Poor's 500 index gained 3.23 to 1,006.68.

Analysts weren't surprised by the market's stability, noting that after last week's double-digit percentage losses in the indexes, stocks are still oversold and attractive-to bargain hunting investors.

"We've just come down such a dramatic decline that I'd expect us to bounce. Having done that, it's now important that we simply stabilize. If we start dumping stocks again, that's a problem," said Larry Wachtel, market analyst at Prudential Securities.

Prior to the Sept. 11 hijackings of planes that crashed into the World Trade Center and Pentagon, most analysts had estimated that the weakened economy, along with corporate profits, would start to improve early next year.

That forecast, though, has been revised as the economic fallout begins to be assessed. In particular, the airlines have cut more than 100,000 jobs and reduced flight schedules citing Americans' fear of flying in the aftermath of the attacks. The tourism industry has also been hurt.

"I think the entire investment community is moving from a mentality of fear to a belief the U.S. is going to come out of this OK," said Matt Johnson, head of trading at Lehman Brothers Inc.

Other industries have also blamed the disaster for difficult times ahead -- but Wall Street had a mixed reaction to the most recent warnings and discouraging news.

Honeywell, a Dow component, fell 74 cents to $27.10 on word that 2001 job cuts will total 15,800. It had previously estimated 12,000.

But AOL Time Warner was up 40 cents to $32.90 despite warning late Monday it now expects slower growth in earnings and revenues this year because of a slump in advertising, which was worsened by the terrorist attacks.

Wal-Mart Stores rose $1.27 to $48.55. The world's biggest retailer sells a lot of non-discretionary merchandise that will help it weather a slowdown in consumer spending, UBS Warburg analyst Linda Kristiansen said in a research note.

Wal-Mart has taken business from competitors in the U.S. and internationally, said Kristiansen, who raised her investment rating to "strong buy" from "hold."

Also today, the National Association of Realtors reported that sales of previously owned homes jumped to a record level in August, but have slowed in the wake of the terrorist attacks two weeks ago. Strong demand for homes has helped support the sagging economy, and the data appeared to bring into question how long that support would last.

"Right now the consumer doesn't have a lot to look forward to," said Bill Barker, investment consultant at Dain Rauscher.

"There will likely be more layoffs and certainly a weaker stock market and a stalling in house prices and price appreciation."

Verizon Communications, the biggest U.S. local phone company, rose $1.25 to $53.25, and SBC Communications, the second biggest, gained $1.22 to $46.28. Telephone stocks were among the biggest contributors to the S&P 500's advance. Investors should buy shares of phone companies because they "have a very secure and stable revenue and cash flow outlook through 2002," said Deutsche Banc Alex. Brown analyst Gary Jacobi. He raised his rating on Verizon and SBC to "strong buy" from "buy."

Advancing issues led decliners 2 to 1 on the New York Stock Exchange.

The Russell 2000 index was up 1.79 at 395.58.

Overseas, Japan's Nikkei stock average rose 1.5 percent. Germany's DAX index was up 1.2 percent, Britain's FT-SE 100 was up 0.8 percent, and France's CAC-40 was up 1.0 percent.

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