Charles Schwab & Co., Inc.

       Morning Market View(TM) for Thursday, September 27, 2001
                       as of 9:30AM EDT
 Information provided by Schwab Center for Investment Research 

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SOFTER OPEN FOR STOCKS

Equity index futures are pointing to a weaker open for stocks as 
Treasuries had a muted reaction to the release of this morning's 
durable goods and initial jobless claims data. The data were 
generally in line with expectations, reflecting continued 
weakness in the manufacturing sector and a growing number of 
unemployed workers.

In energy news, Reliant Resources Inc. (RRI,16.68,f4) reported 
that it would acquire Orion Power Holdings, Inc. (ORN,19.20) for 
$4.7 billion in cash and the assumption of debt. Reliant said 
the deal will enhance earnings as soon as it is closed, which is 
expected at the beginning of 2002. The acquisition would enable 
Reliant to expand its presence in the independent power 
production market, and the company expects to earn $2.05-$2.15 
per share in 2002, assuming the deal goes through. The company 
confirmed earlier 2001 profit forecasts of $1.60-$1.70 per 
share.

Network equipment maker Sonus Networks Inc. (SONS,6.40,f1) 
warned that it expects to report a 3Q loss of $0.05-$0.07 per 
share, excluding items, well below the First Call consensus of a 
$0.01 per share profit due to languishing demand for 
telecommunications products. Sonus said it will take a charge of 
as much as $31 million for an unspecified amount of job cuts and 
facilities closures, as well as a non-cash charge of $435 
million related to writedowns. The company now anticipates a 
fiscal 2001 loss of $0.08-$0.10 per share, down from its 
previous $0.03-$0.04 per share profit forecast.

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TREASURY AND ECONOMIC SUMMARY 

Bonds were higher in volatile trading following the release of 
this morning's economic data. According to the Commerce 
Department, durable goods orders for August declined 0.3%, in 
line with analysts' expectations per Dow Jones Newswires, but 
July's 0.7% decline was revised lower to a 1.1% decline. 
Excluding transportation, durable goods orders actually rose 
0.4% as transportation orders showed the largest drop of all the 
components. Orders for communications equipment and 
semiconductors were notably higher. Overall, the stale report 
reflects continued weakness in the manufacturing sector.

According to the Labor Department, jobless claims for the week 
of Sept. 22 were basically in line with analysts' expectations 
per Dow Jones Newswires, up 58,000 to 450,000 after the prior 
week's data was revised higher to 392,000 claims. The four-week 
moving average of claims rose to 422,000 and continuing claims 
rose to 3,298,000 reflecting the recent onslaught of layoff 
announcements. The week following the terrorist attacks may have 
been distorted due to seasonal effects and the initial 
shock-induced apathy associated with the attacks.

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WORLD MARKETS 

The Bloomberg European 500 Index was slightly lower, down 0.09% 
as of 8:55 a.m. EDT. Computer-related shares sold off on the 
heels of yesterday's pessimistic analyst calls in the U.S. on 
several technology and chip names. Chemical shares were also 
lower after BASF AG (BFASF,29) said that it may fall short of 
its previous growth estimates for the next few years as the 
economy wanes. Adding to the pessimism, a French business 
confidence report for September reflected a worse-than-expected 
decline in sentiment in the manufacturing industry. Defensive 
issues such as energy, utility and drug stocks were higher.

Japan's Nikkei-225 Index led Pacific Rim stocks higher, closing 
up 0.57% on strength in oil, communication and transport stocks. 
Exporters were also higher after the Bank of Japan continued its 
recent series of currency interventions to weaken the yen. The 
European Central Bank also confirmed that it was buying euros 
against the yen on behalf of the BOJ. The U.S. dollar was 
sharply higher against the yen and modestly higher against the 
euro in early trading. Meanwhile, chip stocks fell after Goldman 
Sachs reduced its profit estimates yesterday for Intel Corp. 
(INTC,21,f1&f4). Bargain hunters pushed crude oil prices higher 
even as OPEC agreed to keep oil production unchanged.

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FUTURES WATCH 

In the December Globex futures contract as of 8:55 a.m. EDT, the 
S&P 500 Index was down 3 points (2 points above fair value), 
while the Nasdaq 100 Index was down 15 points (6 points below 
fair value). The December DJIA futures contract was down 15 
points (9 points below fair value), and the October crude oil 
futures traded on the NYMEX were up $0.30 at $22.68/barrel.

William Johnson, Market Analyst

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