Europe Wants This
Recovery. That’s what European and British central
bankers voiced by lowering interest rates 50 basis points each.
The move comes on the heals of the Federal Reserve’s own half-point rate cut
on Tuesday and marks a shift in continental policy-maker thinking. Until now,
the European Central Bank had been expressing a bias toward taming inflation
rather than warding off recession.
The cut in European rates is forecast to stimulate
Euro-zone economies and increase demand for American products. Stocks may be
getting a lift from anticipation of greater overseas sales and higher
corporate profits. Blue-chip companies have a large presence in many
international markets and the Dow recaptured the price level it was at prior
to the 9/11 attacks.
The Dow is up 110 at 9664, the Nasdaq is up 34.60 at
1872.13, and the S&P 500 is up 12.88 at 11.87 at 1127.72.
Qualcomm
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the biggest capitalized tech shares represented on the Nasdaq 100
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Yesterday, Qualcomm came back from a gap-down start to close positive,
despite missing earnings and reporting a $45 million loss. The maker and
licenser of cell phone equipment is confirming a breakout to a new two-month
high today on the intraday bars, up 2.54 at 57.55, which, in turn, is
confirming the constructive indication of the double average volume
yesterday. It’s the second heaviest volume of 2001. When a key stock such as
Qualcomm rallies despite negative news, that is a positive for the market.
A forecast about a key industry group is also working
to boost technology shares and the broad market. The Semiconductor Industry
Association boosted the long-term outlook for chips, saying worldwide demand
would increase 5% next near and at a 21% clip in 2003 and 2004. The
semiconductor index
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has been an NDX leader, vaulting the Nasdaq back to pre-9/11 levels. From the
chip index, Micron Technology
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percentage gainers, up 8% and 4.5%, respectively.
Oil service
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higher after rallying out of Pullback From Two-Month Highs formations
highlighted yesterday on TradersWire Interactive. A rally at
the New York Mercantile Exchange is turning around severely oversold energy
markets after OPEC said it is considering lowering output quotas to the
lowest level in 11 years to contain the slide in the price of oil. OPEC has
a meeting scheduled for next Wednesday and output cuts, originally not
expected to come before the beginning of next year, could arrive as soon as
December. Crude, unleaded gasoline and heating oil are all about 4% higher.
American Express
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is the best performing stock on the Dow, up 4%. Financial stocks often
return higher earnings when interest rates drop, and Dow financial components
were among the strongest blue-chip stocks yesterday.
Wal-Mart
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also in the plus column, up 2.34%, as sales rose slightly more than expected
in October. While today’s sales figures showed sporadic results, discounters
such as Wal-Mart saw slightly rising sales, an indication that consumer
spending, a key component of economic growth, may not tumble as drastically
as feared. Consumer spending accounts for about two-thirds of gross domestic
product.