Fed: Be Prepared For A Rate Increase
Stocks were mixed Tuesday after the Fed
kept rates
unchanged but set the stage for higher rates, saying it will move at
a "measured pace" going forward. In addition, the "patient" wording from
previous statements was removed. Fed funds rates stand at a 46-year low of 1%.
The market spiked after the 2:15 PM Fed announcement
but the move didn’t hold, as there was no
follow-through buying. A few traders on the floor of the NYSE booed the
announcement, preferring the Fed start to raise rates immediately. Fed funds
futures currently indicate a 50% chance of a 1/4% rise in June; there is another
meeting in August. Higher rates can be interpreted as an endorsement of a
growing economy. Former Fed Governor Alan Blinder said that a rate increase is
coming "relatively soon."
Tyco
(
TYCO |
Quote |
Chart |
News |
PowerRating)
reported earnings of $782.4 million on revenue of $10.04 billion with strength
in its engineered products, healthcare and electronics units. For the third
quarter, it expects to earn 39 cents on revenue of $10.01 billion and for the
full year, it upped EPS to exceed $1.52. Clear Channel Communications
(
CCU |
Quote |
Chart |
News |
PowerRating)
reported improvements in its advertising division. Earnings rose to $116.5
million and revenue was up 11%.
The Air France/KLM
merger takes effect today with the new stock — NYSE: AKH — starting to trade
tomorrow. The new combined airline become the 3rd largest by traffic and #1 in
terms of revenue. The French government owns 43% of the company.
Oil prices made a 13-year high,
with unleaded gas at a 20-year high.
After the close, Protein
Design Labs
(
PDLI |
Quote |
Chart |
News |
PowerRating) missed by 0.02, ex-items; Prudential beat by
0.04; Western Wireless
(
WWCA |
Quote |
Chart |
News |
PowerRating) beat handily, by 0.16; Jill Group
(
JILL |
Quote |
Chart |
News |
PowerRating) beat by 0.07 and guided higher; Whole Foods
(
WFMI |
Quote |
Chart |
News |
PowerRating) beat
by 0.05 and raised Y04 guidance; Renaissance Re
(
RNR |
Quote |
Chart |
News |
PowerRating) beat by 0.31.
| Dow | +3.20 | 10317.20 |
| S&P 500 |
+2.02 | 1119.51 |
| Nasdaq | +11.76 |
1950.48 |
The day’s leading sectors were
Amex Gold Bugs
(
HUI.X |
Quote |
Chart |
News |
PowerRating) +3.83%, Gold and Silver
(
XAU.X |
Quote |
Chart |
News |
PowerRating)
+3.32%, Networking
(
NWX.X |
Quote |
Chart |
News |
PowerRating) +2.08%, Semis
(
SOX.X |
Quote |
Chart |
News |
PowerRating)
+1.17%,
Weak today were Biotechs
(
BTK.X |
Quote |
Chart |
News |
PowerRating) -1.80%, Healthcare
(
HMO.X |
Quote |
Chart |
News |
PowerRating) -1.74%.
Economic news releases today: a
much stronger-than-expected factory orders increase at 4.3%
10-year Notes were -065
at 110 095
The dollar
was -1.00 at 89.76
Gold was +3.91 at 391.15
Crude Oil was +0.74 at
38.98
Volume was 1.66 billion
on the NYSE, and 1.85 billion on the Nasdaq.
Market breadth was positive.
| NYSE | Issues | |
| Advancing |
1904 | Up Vol 1036 |
| Declining | 1398 | Down Vol 603 |
| Ratio | 1.36 | 1.71 |
| Nasdaq |
||
| Advancing |
1867 | Up Vol 1211 |
| Declining |
1284 | Down Vol 572 |
| Ratio | 1.45 | 2.11 |
Stocks in the news:
Marvel Enterprises
(
MVL |
Quote |
Chart |
News |
PowerRating) rose sharply after posting
earnings of $31.2 million on revenue of $122.4 million, well ahead of
expectations.
Qwest Communications
(
Q |
Quote |
Chart |
News |
PowerRating) reported a net-loss of $310
million with a 4% drop in revenue. For the next quarter, the company forecasts
improvements in its long-distance and data business divisions.
Priceline.com
(
PCLN |
Quote |
Chart |
News |
PowerRating) posted earnings of $5.1
million on revenue of $224.1 million.
Macrovision
(
MVSN |
Quote |
Chart |
News |
PowerRating) posted earnings of $10.8
million on revenue of $38 million and raised its 2004 outlook. It expects EPS to
reach 17 cents in Q2. The stock is 26% higher on 6X average volume.
Brice Wightman
bricew@tradingmarkets.com