Greenspan Lends Support
Federal Reserve topper Alan Greenspan is reiterating to Congress today that the
central bank stands by the ready to ease monetary policy if economic conditions
continue to merit its assistance, but stocks are selling off, signaling the
limited effect rate cuts have had on corporations’ bottom lines. Standing at
3.75%, the Federal Funds target rate, the primary monetary policy tool used by
the Fed, may soon be tapped out, hemming in central bankers’ capacity to further
support economic vitality.
The Dow is down 115 at 10308, the Nasdaq is off 18.94 at
1969.62 and the S&P 500 is down 12.90 at 1178.09.
With the heaviest week of quarterly corporate earnings
announcements upon us, the news in corporate America continues to be gloomy,
despite the Fed’s six rate cuts this year and pledge of still cheaper money.
Lucent Technologies
(
LU |
Quote |
Chart |
News |
PowerRating) is down 6.5% to 6.60 after
closing above its 50-day moving average yesterday for the first time in two
months. The telecom giant missed Street estimates, losing 23 cents rather than a
forecast 21 cents. Lucent said it would double to 40,000 the number of layoffs
since January, implying it would be left with approximately 59,000 employees.
Lucent also said it will sell off its fiber optic unit to (Japanese Furukawa and
Corning) and discontinue paying dividends, all in an effort to raise cash and
restore profitability.
Blue chips AT&T
(
T |
Quote |
Chart |
News |
PowerRating) and Exxon Mobile
(
XOM |
Quote |
Chart |
News |
PowerRating) released disappointing earnings and are down 2% and 3.5%, respectively.
Amazon.com
(
AMZN |
Quote |
Chart |
News |
PowerRating) beat The Street but is down after
saying it will see its revenues drop. Amazon plunged after failing to break
triple tops on the daily chart and after logging an outside bar down yesterday.
The punishment is severe with volume primed to be its greatest in one year as
traders punish AMZN with a 21% haircut to 12.60.
Amazon also announced an alliance with AOL Time Warner
(
AOL |
Quote |
Chart |
News |
PowerRating)
where the largest online retailer would receive $100 million for exclusively
promoting AOL as an Internet Service Provider.
Monetary policy may be limited in an ever-evolving
financial world. With short-term rates at 3.75% and inflation hovering near 3%,
the inflation-adjusted interest rate is less than 1%, suggesting the Fed
cannot lower rates by more than 1% without sparking inflation.
In his Stock Trading Outlook, Dave Landry mentioned he is
a “Missouri Man,” meaning he wants major stock indices to “show
me” by at least rising above their 50-day moving averages as an indication
of health and bullishness. Dave detailed multiple short setups in
the biotechnology area: the
(
BTK |
Quote |
Chart |
News |
PowerRating) is the session’s weakest area. Dave’s
short targets included Human Genome Sciences
(
HGSI |
Quote |
Chart |
News |
PowerRating) and Myriad Genetics
(
MYGN |
Quote |
Chart |
News |
PowerRating),
down 4% and 6%, respectively..
Transports
(
TRX |
Quote |
Chart |
News |
PowerRating), -3.79%, networkers
(
NWX |
Quote |
Chart |
News |
PowerRating) -3.61%,
oil services
(
OSX |
Quote |
Chart |
News |
PowerRating) -3.4%, and North American Telecom
(
XTC |
Quote |
Chart |
News |
PowerRating) -3.19% are
other areas weighing the market down.