NEW YORK, June 1: Wall Street remains in search of a catalyst after spinning its wheels for another week, unable to get a lift from strong US economic data because of fears over simmering international tensions.

The Dow Jones industrials ended the holiday-shortened week Friday at 9,925.25, a decline of 1.8 percent, slipping back below the 10,000 level. The Standard and Poor’s 500 finished at 1,067.14, losing 1.56 per cent.

The Nasdaq composite, dominated by tech firms, fell 2.83 per cent to close Friday at 1,615.73.

The gloom on Wall Street was reinforced by growing tensions between India and Pakistan, along with persistent concerns over terrorism, even though the economic data over the past week was largely positive.

Robert DiClemente of Salomon Smith Barney said he is maintaining a forecast of four percent growth for the US economy, citing strong productivity data, notably.

But he added, Sadly, the emotions of a Memorial Day week punctuated by ceremonies at Ground Zero, are vivid reminders that all forecasts are more conditional than ever.

US economy remains on a recovery path, but not one strong enough to bring down the unemployment rate.

At the end of the day, the conclusion is that we’re still headed for a modest recovery — not a strong recovery by any means, said Mark Vitner, economist at Wachovia Securities.

The week’s data will likely reinforce expectations for the Federal Reserve to keep interest rates at 40-year lows, with little prospect of monetary tightening until the fall at the earliest.

Nonfarm payrolls, which probably have the biggest market-moving potential, are likely to record their second straight increase in May, after eight months of declines.

Henry Wilmore, economist at Barclays Capital, said the labour market is still very sluggish. I don’t think we’re yet to the point where the labour market numbers are going to show much improvement.

The sluggish job market has prompted some observers of the economy to compare the current recovery to the early 1990s expansion, which was characterized as a jobless recovery.

I hope it doesn’t last but so far our rebound bears some resemblance to the so-called jobless recovery that we had following the 1990-1991 recession, said Robert McTeer, president of the Dallas Federal Reserve Bank, said Thursday.

Among active firms, AT and T slumped 8.9 per cent to 11.97 after seeing its credit rating downgraded by Moody’s. Moody’s also said it was reviewing the rating for Baby Bell firm Verizon, sending the stock down 2.67 per cent for the week to 43.

In the telecom equipment sector, Nortel tumbled 14.34 per cent to 2.21 on a weak outlook for a profit recovery.

Elsewhere, Intel shed 6.02 per cent to 27.62 after Merrill Lynch downgraded its revenue outlook for the chipmaker.

Microsoft slid 7.13pc to 50.91 as it negotiated with regulators on its accounting practices reportedly understating its profits.

In the energy arena, Dynegy fell 3.37 per cent to 8.89 after its top executive quit amid growing scrutiny of its accounting.

There were a few winners, including Philip Morris, up 3.25 per cent to 57.25 after striking a deal to sell its Miller Brewing unit to South African Breweries. Bristol-Myers gained 0.64 per cent to 31.12 on reports it may be seeking a buyout from GlaxoSmithKline.

The bond market strengthened, as the yield on the 10-year Treasury bond eased to 5.039pc from 5.132pc a week earlier and on the 30-year bond to 5.613pc against 5.668pc. Bond yields and prices move in opposite directions.—AFP