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American Morning

Any Relief in Sight for Market Woes?

Aired July 25, 2001 - 09:04   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHEN FRAZIER, CNN ANCHOR: The financial markets open in less than half an hour and the Dow Jones industrial average is coming off its second straight triple digit decline. So is there any relief in sight for Wall Street's woes? CNN's Chris Huntington joins us now from New York City with the latest on the market malaise -- Chris, good to see you again.

CHRIS HUNTINGTON, CNN CORRESPONDENT: Good morning, Stephen.

FRAZIER: Let's focus for a minute, if you will indulge me, on those layoffs. So many layoffs announced yesterday. Usually the market and investors respond favorably to that. First, why is that in general? And secondly, why didn't it happen yesterday?

HUNTINGTON: Sure. Well, in general when companies announce layoffs investors take that as a sign that they're serious about keeping costs contained. Lean and mean was sort of the mantra of the late '90s and that, in normal economic times or in robust economic times, cutting costs and having some layoffs, some work force trimming, is usually good for the company's stock.

However, what we're seeing now, corporate layoff announcements running at a pace, an unprecedented pace. More layoffs announced through June than all of last year and, of course, the big bombshell yesterday from Lucent Technologies, saying that it could cut up to another 20,000 jobs on top of the 19,000 that it already cut, the market taking that simply as bad news. That's a sign of a company and, indeed, an industry in trouble, not getting lean and mean.

FRAZIER: Right. They're down -- well, they're getting very lean, anyway. They're down to half their payroll from this time a year ago.

HUNTINGTON: Yes. Well, they're getting lean and investors are getting mean so it's a tough combination.

FRAZIER: Chris Huntington with an update on how things are going. Chris, we'll talk to you later in the day. Thank you.

HUNTINGTON: OK.

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