Stocks Look To Greenie
Stocks see-sawed throughout the day and closed mixed Wednesday as traders
awaited what will undoubtedly be one of the most closely-watched Greenspan
appearances before Congress on Thursday. On most Fed watchers’ minds is whether
Greenspan will explain why the Fed acted in a somewhat panicky manner when it
made its surprise rate cut on Jan. 3.
With most traders taking a wait-and-see approach, the indexes remained fairly
quiet, with the Nasdaq rising 0.6%, the Dow ending flat, and the S&P 500
slipping 1.3%.
The Nasdaq came within 8 points of the 2900 level near mid-session, motivated
primarily by better-than-expected earnings from Compaq Computer. While the
Nasdaq has turned in an impressive performance with its 27% gain off of its Jan.
3 lows, it is humbling to realize that it is still a whopping 44% below its
March 10, 2000 intraday high.
Volume remained moderately heavy as both exchanges saw slight decreases from
Tuesday’s volume. Nasdaq volume was 2.5 billion shares, and NYSE volume was 1.3
billion.
“The consensus here is that what were seeing is a Fed that is about to
ease in a material way, roughly consistent with 1994 and 1998, and that seems
logical and rational. However, 1998 was entirely proactive, and 1994 had a
completely different profile economically,” said Bryan Brown, Principal,
Spectrum Equity Services LLC.
“Bearish sentiment actually got much higher in 1994 than it got
recently. The issue is that we have not seen bearish sentiment consistent with a
capitulation phase in this market. Fed easing makes it easier for stocks to
rally, but in this particular case, the rallies are likely to be short lived and
not particularly long in duration,” he added.
Top sectors included Internets
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up 2.6%, and broker/dealers
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On the weak side were trnasportation
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down 1.9%, and gold and silver
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In scene reminiscent of late 1999, the Internet sector showed some vigor. Big
gainers included some of the old familiar names like Amazon
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Dow winners were Microsoft
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J.P. Morgan
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McDonald’s
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13/16 as it appears European fears of Mad Cow Disease have taken a bite out of
Big Mac sales. Apparently, the falling sales could significantly hurt McDonald’s
profits.
One tech zinger of the day was Speechworks
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to 45 13/16 on nearly triple average volume. SPWX works with voice recognition
software for phone and Internet use.
Looking ahead, aside from Greenspan’s testimony tomorrow, traders will be
watching for the fourth quarter Employment Cost Index at 8:30 AM and December’s
existing home sales at 10:00 AM ET. Analysts expect a 1.1% increase in the ECI
and 5.05 million existing home sales.