Upbeat Greenspan; Downbeat Nasdaq
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Stocks began the day higher with the
hope that Fed Chairman Greenspan might offer some words of encouragement for a
beleaguered market, but following the Fed Chief’s departure, stocks wilted and
trailed off into the close. Techs had the biggest letdown as the Nasdaq finished
down 2.5% after trading up more than 3% in the early part of the day.
Cyclicals were the only bright spot
for the blue chips, but even they were not enough to shield the Dow and S&P
500 which sank 0.4% and 0.9%, respectively.
While Greenspan tried to offer an
upbeat economic picture, he did say that a further breakdown in business and
consumer confidence could push the economy into recession, and when bluntly
asked whether the economy was currently in a recession, the Chairman said no.
Volume remained flat with Monday’s
level as 1.71 billion shares traded on the Nasdaq and 1.06 billion shares
changed hands on the NYSE.
“The
market kind of feels like it’s due for a rally only because it was oversold and
the negative sentiment had gotten so high. That said, it’s difficult to identify
any catalyst for a knee-jerk rally or any prolonged advance because the economy
is slowing and interest rate cuts take a long time to dig in and have any effect,”
said Bill Schneider, Managing Director of Equity Block Trading, UBS Warburg.
“Greenspan
made some comments that can be considered favorable for the technology group,
but it’s hard to get wildly bullish and think that you have to run to the bank
and take money out to buy stocks,” he added.
According
to preliminary numbers, the Nasdaq sank 61.96 to 2427.70, the Dow lost 43.45 to
10,903.32, and the S&P 500 slid 11.50 to 1318.81.
Top
sectors avoiding the selling were transports
(
$TRX.X |
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PowerRating), up 1.1%, retailers
(
$RLX.X |
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(
$CEX.X |
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PowerRating), up 0.6%.
On
the weak side were semiconductors
(
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(
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down 2.2%, Internets
(
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(
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down 5.2%.
Among
high-profile tech casualties was Cisco
(
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28 1/2 where it rests just slightly above its lowest level since August 1999.
Telecoms
getting whacked included WorldCom
(
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(
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down 8.5%.
One
of the day’s standouts was Northrop Grumman
(
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following word that the company had received a large order from Egypt for Apache
helicopters.
Dow
winners were United Technologies
(
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(
BA |
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and Hewlett Packard
(
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PowerRating), up 0.6%. Dow
losers were Intel
(
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PowerRating), down 6%, and Disney
(
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PowerRating), down 3%.
Looking
ahead, the business inventories report for December will be released on
Wednesday at 8:30 AM ET, and analysts expect to see a 0.3% increase.