What The Fed Said And How It Will Affect You

January 28, 2004
Brice Wightman

In a
major intraday reversal, stocks slid after the Fed left rates unchanged.
Traders were surprised by wording change that may hint of
higher rates sooner than previously thought.
“With inflation quite low and resource use slack, the
committee believes that it can be patient in removing its policy accommodation,”
the FOMC statement said.
The Fed also removed the “considerable period” language it
added in August. Traders are concerned that higher rates will affect capex.
The dollar spiked on the announcement as higher
rates are bullish for the greenback.

Consumer
goods manufacturer Procter & Gamble
(
PG |
Quote |
Chart |
News |
PowerRating) reported a 22% gain on net
income with an optimistic outlook for the next quarter. Strong sales of OTC flu
medications including Nyquil and beauty products propelled its earnings to $1.82
billion on revenue of $13.22 billion. Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating) reported
higher fourth-quarter earnings of $6.1 million vs. a net loss of $1.76 a year
ago. Revenue shot up 62% to $479.1 million. Time Warner
(
TWX |
Quote |
Chart |
News |
PowerRating)
reported net income of $638 million on a 16.4% increase of revenues of $11.43
billion. Time Warner released the hit movie “The Return Of The King.” Altria
(
MO |
Quote |
Chart |
News |
PowerRating) reported earnings that were 18% higher at $2.09
billion on revenue up 10% at $20.69 billion. Kraft
reported income of $869 million on $8.33 billion revenue.

The “My Doom” worm is clogging
computers around the world, and some say it is the most prolific computer virus
ever. One-twelfth of all e-mails sent yesterday may have been as a result of the
virus, which is now in 142 countries. Software security firms Symantec
(
SYMC |
Quote |
Chart |
News |
PowerRating)
and Network Associates
(
NET |
Quote |
Chart |
News |
PowerRating) are near a 52-week highs. The virus is
scheduled to launch another wave of attacks on Super Bowl Sunday.

Dow	-142.66	10467.26
S&P 500	-15.53	1128.52
Nasdaq	-39.67	2077.37

Economic news releases included
New Home sales dipping to 1060K, and unchanged durable orders. The Fed left
rates unchanged, but its statement spooked the market after the announcement.

10-year Notes were
+1.035 at 112 285

The dollar
was +0.71 at 86.99

Gold was +6.32 at 414.18

Crude Oil was -0.45 at
33.67

Volume was
1,840,592,000 on
the NYSE, and 2,281,595,000 on the Nasdaq.

Market breadth was negative.

NYSE	Issues
Advancing	971	Up Vol 359
Declining	2366	Down Vol 1267
Ratio	2.43	3.52
Nasdaq
Advancing	807	Up Vol 384
Declining	2423	Down Vol 1718
Ratio	3.00	4.47

Stocks in the news:

Shares of Tenet Healthcare
(
THC |
Quote |
Chart |
News |
PowerRating)
dropped 18% after reporting a planned $1.4 billion restructuring charge as it
expects to sell 27 hospitals, 19 of which are located in California.

Flextronics
(
FLEX |
Quote |
Chart |
News |
PowerRating) tacked on 8% as it
reported earnings of $93.9 million on revenue of $4.15 billion, well ahead of
analysts’ consensus.

Antivirus-software maker Network Associates
(
NET |
Quote |
Chart |
News |
PowerRating) reported net income of $41.3 million on $268.9 million revenue. NET
expects full-year revenue to reach $930 million.

Oil titan ConocoPhillips
(
COP |
Quote |
Chart |
News |
PowerRating)
reported fourth-quarter earnings income of $985 million, a 74% increase from the
year-ago period. Revenue was up 11% to $26 billion, thanks to higher gas and oil
prices.

bricew@tradingmarkets.com

What The Fed Said And How It Will Affect You

BUY THE FEAR, SELL THE GREED

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