Drivin' and Cryin'

JUST WHEN IT appeared as if the market was going straight to hell, bulls rushed in to salvage the day.

Following a mildly upbeat open and a midday dip into the red, the major averages clawed their way back into positive territory by the close. The Dow Jones Industrials finished up 117 to 8425 and the Standard & Poor's 500 ended 15 points higher at 893. The Nasdaq Composite gained 28 to 1292.

Pleas of not guilty entered by two former WorldCom (WCOEQ) executives didn't seen to faze traders. In a Manhattan courtroom on Wednesday, ex-Chief Financial Officer Scott Sullivan and a former account executive, Buford Yates Jr., denied charges they orchestrated a multibillion-dollar accounting fraud that led to the bankruptcy of the telecom giant.

Instead, Wall Street paid more attention to consumer spending, which has propped up an otherwise dismal economy throughout the recession. Front and center were monthly sales reports from the major auto makers. Ford (F) boasted a 12% rise in total U.S. sales for August as incentives continued to attract buyers. Rival DaimlerChrysler (DCX) said monthly sales jumped 24% at its U.S. Chrysler unit. General Motors (GM) checked in with an 18% August sales bump, more than enough to merit an increase in production and earnings estimates for the third quarter. Daimler shares climbed 4% higher; Ford gained 1% and GM's stock moved up fractionally.

It looks as if Americans are planning to hit the highways in all of those shiny new vehicles instead of flying. Northwest Airlines (NWAC) announced it will lay off about 1,000 employees, or roughly 2% of its work force, due to an anticipated slowdown in air travel this fall. Shares moved 3% higher as investors celebrated the carrier's effort to cut costs.

But shoppers weren't just looking under hoods and kicking tires in August. Costco Wholesale (COST) attracted a bevy of buyers last month as well with its rock-bottom warehouse prices. The discount retailer recorded a 6% jump in same-store sales for the four weeks ended Sept. 1. Total August sales rose 10% to $3.01 billion from $2.74 billion a year earlier. Costco shares rose 4%.

Propeller-heads who required more than five-gallon tubs of Jiffy and 48-packs of Charmin headed instead to Sharper Image (SHRP), where August same-store sales soared by a whopping 15%. The specialty retailer attributed its strong showing to the popularity of its proprietary and private-label products. "We believe these sales gains are especially noteworthy given the current uncertainties facing the U.S. economy," said Chairman and Chief Executive Richard Thalheimer in a written statement. Total sales ??compassing catalogs, the Internet and physical stores ??or August rose 40% to $34.5 million from $24.6 million a year earlier. Sharper Image shares gained 3%.

The news wasn't as pleasant from the apparel rack. While reiterating its guidance for the second half as well as the full year, AnnTaylor Stores (ANN) posted a 7.6% decline in August same-store sales. However, the women's clothing retailer said total sales for the four weeks ended Aug. 31 rose 2.4% to $88.6 million from a year ago. Shares of AnnTaylor inched up 2%.

Overall, shopping was spotty during the waning days of summer. According to trend-tracker Redbook, national retail sales fell 0.2% for the week ended Aug. 31 from year-earlier levels. A slowdown at department stores and weak back-to-school business were to blame. The upcoming anniversary of the terrorist attacks could hurt sales in September, Redbook warned.

Too bad demand for data on the human genome was even worse. Incyte Genomics (INCY), noting a slowdown in spending by its clients, lowered its full-year revenue forecast to between $100 million and $130 million. It previously anticipated revenue of $130 million to $150 million. Analysts had been looking for $134.5 million. Incyte now expects to post a wider loss as well; in the range of $75 million to $98 million, compared with earlier expectations of a loss of $65 million to $85 million. In 2001, Incyte reported an operating loss of $187.9 million, or 80 cents a share, on revenue of $219.3 million. Its stock sank 22%.

Unlike Incyte's, Biopure's ( BPUR) stock headed north after it received a nearly $1 million grant from the U.S. Army to develop its blood substitute for emergency use on the battlefield. The cash will fund Phase II trials of Hemopure, a solution made from bovine hemoglobin that would be used to treat blood loss in soldiers. Biopure shares jumped 29%.

Moving from the chemistry lab to the chicken coop, Tyson Foods (TSN) lowered its 2002 earnings projection. The meat processor said it now expects a full-year profit of $1.03 to $1.07 a diluted share, excluding items. The guidance is below already-lowered estimates given in July for 2002 earnings of $1.08 to $1.12 a share. The stock fell 2%.

And speaking of food, a temporary restraining order has been issued preventing the sale of Hershey Foods (HSY). The ruling will keep the candy maker off the auction block until a Pennsylvania judge decides whether the state's attorney general has the right to block the sale. Analysts expect Hershey to attract bids as high as $15 billion. Shares slipped 4%.

Economic indicators were few and far between on Wednesday. Most notable was a report out of the Commerce Department showing that construction spending leveled off in July after declining for two straight months. The result, while not worth celebrating, was a bit better than some analysts had expected.

With buyers returning to the equities markets, bonds treaded water. The yield on the 10-year Treasury held steady at 3.96%. Two-year notes gained three basis points to yield 2.01%.