Rational Dullness

November 29, 2000
Daniel Beighley

A downward revision in GDP that showed an anemic second-quarter growth rate
of 2.4% failed to excite the Nasdaq, which hit another 52-week low as it
finished the day down 1.0%. The election confusion also continued to keep
traders non-committal and edgy.

Second quarter Gross Domestic Product was revised down to 2.4% from 2.7%, and
that was in line with analyst estimates. Financials, cyclicals, and drug stocks
celebrated the news of the chilly growth rate and managed to keep the Dow up
1.5% and the S&P 500 up 0.4%.

Nasdaq volume picked up by about 8% over Tuesday’s level, as 2.03 billion
shares changed hands. NYSE volume rose 10%, as 1.10 billion shares traded.

With the economy now growing at its slowest rate in four years, with
inflation tame, and with the speculative segment of the market vaporized,
analysts are beginning to comment that the Fed is really running out of reasons for
keeping interest rates at their current levels.

“I have a positive outlook on the stock market, but what bothers me in
the short term is that according to Investors Intelligence the bulls are
currently at 55.1% and those looking for a correction are at a 52-week low. That
troubles me,” said Bernadette Murphy, Chief Market Analyst, Kimelman &
Baird.

“What we may have to experience is still another downdraft in the Nasdaq
market in order to get things righted as far as confidence or sentiment is
concerned,” she added.

According to preliminary numbers the Nasdaq fell 27.88 to 2707.10, the Dow
gained 121.53 to 10,629.11, and the S&P 500 added 5.88 to 1341.97.

Looking ahead, the October personal saving and spending numbers will be
released Thursday at 8:30 AM ET, and analysts expect an increase of 0.2% in
each.

Rational Dullness

BUY THE FEAR, SELL THE GREED

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