Greenspan Cold Shoulders Tech

February 28, 2001
Daniel Beighley

Alan Greenspan offered few kind words to traders looking for a rate cut ahead
of next month’s Fed meeting, and the apparent lack of a near-term cut weighed
heavily on stocks Wednesday as the Nasdaq fell 2.5% and the Dow and S&P 500
lost about 1.4% each.

The tech swoon left the Nasdaq at yet another 26-month low at a levels not
seen since December 1998.Â

The Fed Chairman commented that the steady demand for autos and housing
indicated that the consumer remains moderately confident and that a rush to cut
rates was not necessary. Critics, however, cited the downward revision in GDP
and the collapse in consumer confidence as proof enough of a wounded economy in
need of help.

Fourth quarter GDP was revised down to an anemic 1.1% growth rate from the previous
1.4% and that further showed evidence an economy teetering on the edge of recession.
The dismal numbers were the lowest rate of growth in 5 1/2 years.

Comments by Wayne Angell last week may have caused the Fed to back off of a
rate cut so as not to appear as caving in to pressure from a former Fed
governor.

Volume for the day picked up by about 10% above Tuesday’s levels as 2.0
billion shares traded on the Nasdaq and 1.2 billion shares were swapped on the
NYSE.

“You have to assume that we are very oversold here. The Nasdaq has lost
about 25% over the last four weeks, and the Nasdaq 100 is down over 30%. That’s
a significant selloff without much of an intervening rally,” said Ricky
Harrington, Technical Analyst, Wachovia Securities.

“So one thing we can assume is that we are in a very oversold condition,
and that means we have to be looking for a rally. I expect a Federal Reserve
rate cut almost any day now despite what Greenspan is saying today. I still
think there’s a very good chance of a rate cut shortly,” he added.

According to preliminary numbers, the Nasdaq fell 56.00 to 2151.82, the Dow
lost 141.60 to 10,495.28, and the S&P 500 slipped 18.00 to 1239.94.

Juniper did, however, manage to bounce late in the day and eke out a gain of
1 23/32 to 64 9/16.

Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) has held up well despite the meltdown that has the
Nasdaq down more than 27% in four weeks. Part of the reason the software giant
is hanging in there is the fact that the company appears to have landed some
solid legal blows against the government’s plan to break up the company.

Microsoft fell just 3/8 to 59, and legal scholars think there is a pretty
good chance the company could win on appeal and prevent the breakup. This might
be the sort of catalyst the Nasdaq needs to turn.

Looking ahead, the National Association of Purchasing Managers report will be
released on Thursday at 10:00 AM ET, and analysts look for a reading of 42%.

Greenspan Cold Shoulders Tech

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources