Rise in unemployment shakes markets

This week, Wall Street will be looking for any news that provides an indication of a rebound in the economy. Last Friday, the Labor Department said that unemployment reached 4.9 percent. The figure was worse than many on Wall Street were expecting; unemployment is now at its highest level in nearly four years. \nMajor markets took the news badly, as the Dow Jones Industrial Average, Nasdaq and S&P 500 all closed in the red. \nThe markets are now approaching lows not seen since the beginning of the year. This week, look for earnings guidance to be scrutinized by investors. In the coming weeks, companies will be warning that they will not reach expected profit targets. If investors are faced with a large amount of warnings, look for the markets to trade lower.\nThe S&P 500 closed Friday's trading session down 20.62, at 1,085.78. The S&P 500 is now at its lowest level since 1998. The Dow Jones Industrial Average ended down 234.99 points, at 9,605.85, and the Nasdaq lost 17.94 points, at 1,687.7. The Nasdaq, down 12 percent in the past two weeks, is nearing a three-year low. \nStock News\nLate in the evening on Labor Day, Hewlett Packard announced it would acquire Compaq Computer in a deal valued at $25 billion. Once the deal is completed, Hewlett Packard will become the largest personal computer vendor in the world and rival IBM in size, according to Reuters. After the merger, Carly Fiorina will retain her position as CEO of Hewlett, and Michael Capellas, CEO of Compaq, will become president. \nLast Thursday, Intel reported that its sales for the third quarter are expected to be at the low end of a range it set in July. The company is now forecasting a decline of as much as 29 percent from 2000 third-quarter sales.\n\"The overall theme of this update is that all of our businesses are performing as expected. Specifically, the microprocessor business continues to follow seasonal patterns and is showing more strength in the second half than in the first half," CFO Andy Bryant said in a conference call. \nOn Friday, Circuit City said that it expects to report a loss in the first half of the year. The company announced that it was affected by weak personal computer sales and an exit from the appliance business. Circuit City's report was quite a contrast from one given by competitor Best Buy only a day earlier. Best Buy announced its sales would surpass Wall Street expectations due to increased DVD and digital television sales.\nFinal Note\nTalk of an interest rate cut has increased after last week's dismal employment report. The Federal Reserve, set to meet on Oct. 2, has cut interest rates seven times this year.\n"The economy hasn't exactly turned on a dime after seven rate cuts and people are very edgy about that," Alan Ackerman, chief market strategist at Fahnestock told MSNBC.com. "It's very likely the Fed will react to the unemployment numbers and perhaps cut rates again"