Charles Schwab & Co., Inc.

       Midday Market View(TM) for Tuesday, September 4, 2001
                       as of 1:00PM EDT
  Information provided by Schwab Center for Investment Research 
                         and Bridge

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U.S. INDICES
(1:00 p.m. EDT)

----------------------------------
Market            Value     Change

DJIA          10,119.49   + 169.74
Nasdaq Comp.   1,821.55    + 16.12
S&P 500        1,150.46    + 16.88
----------------------------------
NYSE Advancing Issues        1,745	
NYSE Declining Issues        1,180
NYSE Trading Volume        550 mln
NASDAQ Advancing Issues      1,611
NASDAQ Declining Issues      1,707
NASDAQ Trading Volume      674 mln

==================================

U.S. TREASURIES
----------------------------------
Value            Yield      Change

6-month bill      3.27%        n/a
5-year note       4.52%    + 13/32
10-year note      4.96%    + 12/32
30-year bond      5.45%     + 7/32

The tables above look best when viewed in a fixed-width font, 
such as "Courier."

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NAPM BLAST-OFF

Markets were firing on all cylinders in early trading thanks to 
a better-than-expected National Association of Purchasing 
Management's survey that suggested some stabilization in the 
beleaguered manufacturing sector of the economy. Heading up the 
acquisition dominated headlines, Hewlett Packard's (HWP,20,f2) 
bid for Compaq Computer (CPQ,12.11,f2 & f4) did little to fuel 
the small rally in technology. As of 12:00 p.m. EDT, healthcare 
and pharmaceutical issues led advancers, while regional banks 
led decliners yet again.

Shares of computer giant Hewlett-Packard were lower after the 
company announced that it has agreed to purchase rival Compaq 
Computer in a deal worth $25 billion in stock, as both companies 
look to enhance their competitiveness in an industry plagued by 
languishing sales and an ongoing price war. The acquisition will 
include 15,000 job cuts and Hewlett-Packard will own 64% of the 
combined company, with Compaq owning the remaining 36%.

Shares of Dow component Johnson & Johnson (JNJ,56,f2) were 
trading higher after a clinical trial in Europe showed 
encouraging results for the company's new cardiovascular device 
that aids in the prevention of restenosis or the recurring 
blockage of arteries. The company has developed stents, which 
are small metal tubes that surgeons use to open arteries, coated 
with antibiotics. The clinical trial, which has lasted more than 
six months, showed patients who had received JNJ's Cypher stent 
had no incidences of arteries clogging for a second time.

The enthusiasm in technology was tempered somewhat by Sanmina's 
(SANM,16.99,f1) announcement that its 4Q earnings would fall 
short of previous estimates. The company expects 4Q profits, 
excluding amortization and writeoffs, to come in at $0.01-0.02 
per share, lower than the First Call mean consensus of $0.09 per 
share. Revenues are also expected to be lower as the company 
confronts the slowdown in capital spending.

In energy news, Oklahoma-based Devon Energy Corp. (DVN,44,f2) 
has made an offer to purchase Canadian energy company Anderson 
Exploration Ltd. (AXN,25) for $3.4 billion, plus the assumption 
of $1.2 billion in debt, in a deal that would make the company 
the largest among independent North American exploration and 
production companies. Shares of Devon were lower, while Anderson 
traded higher on the news.

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TREASURY AND ECONOMIC SUMMARY

Bonds, which declined following the release of this morning's 
NAPM survey, fell off a cliff as the rally in stocks heated up. 
The NAPM survey showed an unexpectedly large increase in August 
to 47.9, up from July's 43.6 level and above the Dow Jones 
Newswires forecast of 44. The increase reflects a big 
deceleration in contraction in the manufacturing segment of the 
economy. The prices paid component fell to 33.9 from July's 38.7 
as inflationary pressures continue to subside. The production 
index rose to 52.2 from July's 46.4, the new orders index rose 
to 53.1 versus July's 46.3 and the employment index rose to 40.8 
from July's 37.2 as the manufacturing sector appears to be 
stabilizing.

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WORLD MARKETS

European bourses got a shot in the arm following this morning's 
NAPM release. The Bloomberg European 500 Index was up 1.54% as 
of 12:00 p.m. EDT. Hewlett Packard's acquisition of Compaq sent 
stocks soaring overseas early, but gains were neutralized a bit 
by Ericsson's (ERICY,4.21,f1) warning that it sees no imminent 
recovery in the market for its products next year. Adding fuel 
to the fire in the depressed communications industry, both 
Marconi's (MONI,1.55,f1) CEO and chairman stepped down, and the 
company eliminated another 2,000 positions as Marconi now 
expects a first-half operating loss, owing to substantial 
writedowns for inventory and recent acquisitions. The company 
had previously expected a breakeven first-half. The euro 
extended its decline against the U.S. dollar on the heels of the 
better-than-expected NAPM numbers.

William Johnson, Market Analyst

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