Market Update: Stocks Slip Slightly After Fed Holds Rates Steady

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Sector Watch Bonds/Economy

After so many days of driving the market lower on election uncertainty, the major indices were having their second day of gains.

The Nasdaq and the Dow Jones Industrial Average were lately slipping from highs of the day after the Federal Reserve said it would hold interest rates steady at 6.5%. At the same time, the monetary policy making body said the risk of rising inflation remains higher than the risk of an economic slowdown

Major Indices INDEX CHANGE % VALUE Dow 58.77 0.55% 10,739.83 S&P 500 5.93 0.43% 1388.88 Nasdaq 36.32 1.16% 3174.59 Russell 2000 5.55 1.14% 492.46 TSC Internet 1.66 -0.31% 529.54 NOTE CHANGE PRICE YIELD 10-Year Treasury 11/32 100 6/32 5.725% Market data as of: 2:16 PM ET, Nov 15 2000

Tech stocks were getting a hefty boost from semiconductors today after chipmaker Analog Devices(ADI) posted fourth-quarter earnings that beat analysts' estimates by 4 cents. Bonus time. The company forecast "solid" revenue growth over the next few years. The stock lately was up 19.6%.

The news helped lift the Philadelphia Stock Exchange Semiconductor Index 4.9%. Blue-chip but recently battered semiconductormaker Intel(INTC) was up 4.7%. Applied Materials(AMAT) was hopping 4.1% ahead of releasing its earnings after the closing bell.

Chips were fighting the negative vibes from Network Appliance(NTAP), which lately was 18.7% lower. The networking data storage company announced earnings that beat estimates by a penny, but it tempered the solid earnings with a forecast of slower sales growth. On the news, Bear Stearns downgraded the stock to attractive from buy.

Another naysayer on the Nasdaq was software company Micromuse(MUSE), which last week reported better-than-expected earnings, but lately was hurt by concerns of slowing growth. It lately was down 8.5%.

On the NYSE , Hewlett Packard(HWP) was giving back yesterday's gains. Hewlett has taken quite a ride in the past two days, tanking Monday on news it missed earnings estimates by a dime and then rebounding yesterday as investors decided tech stocks looked oversold. It was lately 3.7% lower.

Financials were hurting after Bank of America(BAC) said fourth-quarter charge-offs, which are bad loans that are treated as a loss, could be more than double third-quarter levels. It was 8.6% lower. The Philadelphia Stock Exchange/KBW Bank Index was sliding 1.7%. Bank of America, along with First Union(FTU), was hurt by a troubled loan made to Sunbeam(SOC). First Union, which was hurt by this yesterday, was off another 1.6%.

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Sector Watch

Paper stocks had strength today. The Philadelphia Stock Exchange Forest & Paper Products Index was rising 1.9% on consolidation fever in the industry. Georgia-Pacific(GP) said yesterday that it expected its $7.5 billion bid for Fort James(FJ) to close "very soon" after its recently extended regulatory review. Also yesterday, Weyerhaeuser(WY) confirmed that it had financing for its proposed acquisition of Willamette Industries(WLL).

Energy stocks were strong, with the American Stock Exchange Natural Gas Index 3.3% higher and the Philadelphia Stock Exchange Oil Service Index increasing 3.7%.

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Bonds/Economy

Bonds slid a bit, but then sprung back after the Fed announced there would be no change in interest rates and no change in its inflation outlook. There was a minority opinion that the Fed would move to an opinion that showed no further interest rate increases would be likely. Instead, the Fed said inflation still poses a threat to the economy.

The benchmark 10-year Treasury note was up 9/32 before the announcement. It lately was at 100 6/32, up 11/32, to yield 5.725%.

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