It’s Like Pouring Gasoline On A Fire

April 18, 2001
Daniel Beighley

Stocks rallied sharply Wednesday after a surprise 50-basis point rate cut
early in the session that caught most of Wall Street off guard. Technology
stocks were the primary beneficiaries of the cut, although there was also
strength in financials, biotech, retailers, and cyclicals.

The Nasdaq powered its way back above the 2000 level with a 8.1% gain while
the Dow and S&P 500 booked solid gains of 3.9% each.

The broad rally took place on monstrous volume, as 3.08 billion shares traded
on the Nasdaq and 1.90 billion shares changed hands on the NYSE.Â

“Obviously the market responded exuberantly to the Fed’s inter-meeting
cut here. I think there was sort of a resignation that they weren’t going to do
that, and that they were going to wait until the May time frame, and when they
did it today it caught the whole market by surprise. It’s been a buying frenzy
ever since,” said Tony Cecin, Director of Equity Trading, U.S.
Bancorp/Piper Jaffray.

“I even think some of the sidelined money is coming into the market
here. I think you were even seeing that before the cut today because many
companies had made negative comments, and those opinions are being accepted very
positively by the market in general and technology in particular,” he
added.

According to preliminary numbers, the Dow rose 398.91 to 10,615.64, the
Nasdaq jumped 156.40 to 2079.62, and the S&P 500 gained 46.66 to 1238.19.

One giant tech mover was Rational Software
(
RATL |
Quote |
Chart |
News |
PowerRating) which jumped 5.19 or
33% to 22.69 on heavy volume of 10 million shares.

Looking ahead, traders will be watching for Thursday’s new jobless claims number which will be released at 8:30 AM ET.
The trend has been up in recent weeks so it will be interesting to see if the
Fed’s action Wednesday might be an attempt to avert a prolonged recession.

It’s Like Pouring Gasoline On A Fire

BUY THE FEAR, SELL THE GREED

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