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The Commerce Department has been busy this week, and today they reported that personal income rose 0.5% in July. That was the largest increase since December, but it still couldn't help consumers from spending less. Consumer spending rose 0.1% in July, which was the smallest gain since October and well below June's 0.5% increase.

Consumers were hesitant to fritter away their tax rebate checks as worries of layoffs persist. Spending on durable goods took the biggest hit, and even spending on food and clothes inched down. Consumers still elected to pay rent, visit the doctor, and pay utility bills, so spending on services rose 0.4%.

Investors have decided not to squander their rebate checks on technology stocks today, so the Nasdaq is down 26 points. Internet and Software stocks are taking the biggest hit, but that pales in comparison to Sun Microsystems' (SUNW) 16% drop.

Biotechnology is a bastion of strength this morning, and insurance, oil, and drug stocks are putting in small gains.

The Dow is down 27 points thanks to technology stocks like IBM, Microsoft, and Intel. Losses would be greater if it weren't for caffeine, nicotine and petroleum (Coke, Exxon, and Phillip Morris).

The Securities Broker Index (XBD.X) is trying to remain in positive territory even after Charles Schwab (SCH) announced a fresh round of job cuts. Waning investor enthusiasm has forced the company to reduce its workforce by 10%. That will save Schwab $65 million per quarter, but it can't save their stock from making a new 52-week low.

The Bank Sector (BKX.X) is down slightly, possibly due to a Wall Street Journal article about pending writes off for bad credit card debt. Metris (MXT), Providian (PVN), and Capital One (COF) would have the most exposure to this problem, and are down $0.33, $1.10, and $0.78 respectively.

Technically we have the Dow 42 points away from 10,000, and the triple Qs (AMEX:QQQ) testing support at 36.54. The Nasdaq Composite has dipped below last weeks low of 1,817, as has the Software Index (GSO.X). The Biotechnology Index (BTK.X) is at 547, which is three points away from resistance at 550.

Jeffrey Canavan
Assistant Analyst

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