Charles Schwab & Co., Inc.
Email Alert

Midday Market View(TM) 
for Wednesday, January 2, 2002
as of 12:30PM EST
Information provided by Schwab Center for Investment Research
and Bridge 


U.S. INDICES
(12:30 p.m. EST)

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Market            Value     Change

DJIA           9,975.01    - 46.49
Nasdaq Comp.   1,940.70     - 9.70
S&P 500        1,148.08    - 12.94
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NYSE Advancing Issues        1,151	
NYSE Declining Issues        1,882
NYSE Trading Volume        503 mln
NASDAQ Advancing Issues      1,465
NASDAQ Declining Issues      1,941
NASDAQ Trading Volume      689 mln

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U.S. TREASURIES
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Value            Yield      Change

6-month bill      1.83%        n/a
5-year note       4.44%    - 16/32
10-year note      5.12%    - 21/32
30-year bond      5.52%    - 21/32

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

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STOCKS SUFFER NEW YEAR'S HANGOVER

Despite a better-than-expected Manufacturing Institute of Supply 
Management's (ISM) Report on Business, which reflected improving 
conditions in the manufacturing sector, stocks are trending 
lower at midday. Online stocks, including EBay Inc. 
(EBAY,65,f1&f4) and AOL Time Warner (AOL,31,f2), are lower 
following analyst downgrades while chip stocks are advancing on 
the heels of an upbeat Semiconductor Industry Association 
report. Memory chip manufacturer Micron Technology (MU,33,f2) is 
higher following news that a DRAM rival raised prices by 30%. 
Treasuries are lower following the ISM data and European bourses 
are lower late in the day.

As of 11:52 a.m. EST, the Dow Jones Industrial Average is down 
0.4%, the Nasdaq Composite Index is lower 0.3% and the S&P 500 
Index is down 0.5%. Energy-related stocks are among the worst 
performers while computer storage, networking, and semiconductor 
shares are leading the advancers.

Chip stocks are higher following a Semiconductor Industry 
Association (SIA) report that global sales of semiconductors 
rose 1.6% in November to $10.6 billion on the heels of October's 
2.5% increase to $10.44 billion. SIA also indicated the industry 
is on pace to realize 4.7% growth in 4Q sequential sales. Shares 
of Micron Technology are higher after South Korea's Hynix 
Semiconductor (HXSCF,0.80) raised the price of its memory chips 
by 30%, its third increase in a month after two previous 20% 
increases in December, suggesting an improving pricing 
environment for memory chip makers.

Shares of Schering-Plough Corp. (SGP,35,f2) and Merck & Co. 
(MRK,58,f2) are lower after the drug manufacturers reported that 
their combined allergy drug didn't prove as effective as hoped 
in late-stage clinical trials. The drug, which borrows from the 
chemical make-up of both Schering's Claritin and Merck's 
Singulair products, "did not demonstrate a statistically 
significant improvement in the treatment of seasonal allergic 
rhinitis compared to each product administered separately."

Shares of AOL Time Warner are lower after analysts lowered their 
revenue and earnings forecasts due to continued advertising 
doldrums, even as the Internet and media giant reported that 
member retail online purchases rose 67% to over $33 billion in 
2001 from the prior year.

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TREASURY AND ECONOMIC SUMMARY

Bonds are under pressure following this morning's release of the 
Institute for Supply Management's manufacturing index, which 
rose to 48.2 in December from November's 44.5, better than 46.0 
forecast per Dow Jones Newswires. A reading below 50 reflects 
contraction in the sector while a reading above 42.7 generally 
indicates expansion in the overall economy, according to ISM. 
The new orders index rose to 54.9 from November's 48.8 and the 
employment index rose to 40.5 from 35.7. The prices component 
rose to 34.7 from 31.6. While still reflecting contraction, this 
latest ISM manufacturing index suggests an improving outlook for 
the manufacturing sector, rising for two consecutive months.

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WORLD MARKETS

European markets continue to trade lower late in the session 
despite the euro-zone manufacturing Purchasing Managers' Index's 
rise to 44.1 in December from November's 43.6, reflecting 
decelerating contraction in the sector. The Bloomberg European 
500 index was down 1.5% as of 11:52 a.m. EST, paced by declines 
in energy stocks. Chip shares were higher, led by Infineon 
Technologies (IFX,22) following the Hynix Semiconductor news, 
suggesting that the sector may be stabilizing. The euro is 
higher against the dollar as concerns about a rough transition 
to the new currency in the euro-region abated.

William Johnson, Market Analyst

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