How Fed Uncertainty Whipsawed The Market
Stocks had a roller-coaster ride
throughout Wednesday’s trading day, only to add on gains in the last hour of
trading.
The Dow Jones Industrials closed higher
by 0.4% and the Nasdaq Composite rose 1.8%. Overall, Wednesday’s market action was
one of uncertainty after Federal Reserve Chairman Alan Greenspan warned that
inflation would require close monitoring of prices. With that said, traders are
now anticipating a 25 basis point cut as opposed to a 50 basis point cut when
the Federal Reserve meets next.
Kansas City Southern Industries
(
KSU |
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PowerRating) closed 17.5% higher for the day after the company retracted an
offering of stock and convertible securities which would have been worth $165
million. The planned offering was scrapped due to the recent fall in the
companies stock price.
Lennar Corp
(
LEN |
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PowerRating) surged higher
Wednesday and gained 12.9%. The Miami-based homebuilder earned $1.40 per share
for Q2 which surpassed analyst expectations of $1.06 according to a survey
conducted by Thomson Financial/First Call
Tellabs
(
TLAB |
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PowerRating) shed 24.3% after
the company released an earnings warning last night.
Epiq Systems
(
EPIQ |
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PowerRating) lost 24.0%
today.
The GSTI Internet Index
(
$GIN.X |
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PowerRating)
was the leading sector Wednesday as it added 7.7%. Gains came within the last
hour of trading.
Also putting in a good performance was
the Biotechnology IndexÂ
(
$BTK.X |
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PowerRating) which rose 5.7%, assisted by San
Diego based Amlyin Pharmaceuticals
(
AMLN |
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PowerRating) and Gilead Science
(
GILD |
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PowerRating).
Amlyin tacked on 11.6% after the company announced the Phase II testing of the
drug AC2993, achieved its primary goal for Type 2 diabetes. Gilead gained ground
after Eric Ende at Banc of America Securities raised his price target for
the company to $70 from $58.
Finally, the Interactive Week Internet
Index
(
$IIX.X |
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PowerRating) which rose 3.4%Â
On the downside was the Gold and
Silver Index
(
$XAU.X |
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PowerRating) which led by shedding 2.9%. Also closing
lower was the Oil Services Index
(
$OSX.X |
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PowerRating) which lost 1.7%
Following suit was the Semiconductor
Index
(
$SOX.X |
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PowerRating) after Lehman Brothers analyst Dan Niles cut earnings
estimates on chipmaker Intel
(
INTC |
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PowerRating) and rival Advance Micro Devices
(
AMD |
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PowerRating).
The Semiconductor Index closed marginally lower by 0.4%.
Individual stocks that lost ground
today included Global Power Equipment Group
(
GEG |
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PowerRating), down 10.9%.
Actrade Financial Technologies
(
ACRT |
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PowerRating)
fell 21.5% after the company announced that Alex W. “Pete” Hart would
be joining the Board of Directors. Hart is a pioneer in global payment
solutions.