The Fed Chairman Puts Down a Concrete Floor for the Market
SAN FRANCISCO -- Stealing it back from
The Dow Jones Industrial Average jumped 3.2% today, while the S&P 500 gained 3.9%. Even more impressive, the Nasdaq Composite Index soared 274.05 points, or 10.5%, its biggest-ever point and percentage gain.
In New York Stock Exchange trading, advancers bested decliners by a 5-to-2 ratio and new 52-week highs beat new lows 167 to 89. In over-the-counter activity, gainers led by nearly 7 to 3, although new lows outpaced highs by 235 to 65. Trading volume of 1.4 billion shares on the Big Board and 2.4 billion in Nasdaq activity further evinced the session's power.
"This was a relief rally in the truest sense of the word," said Greg Nie, chief technical analyst at
First Union Securities, reflecting not only on Greenspeak, but the growing likelihood the election morass will soon be dredged and made safe for tract housing by the judicial corps of engineers. "But it's too optimistic to say we're putting in a V-bottom. The underpinnings are iffy
|How Now Ol' Dow?
|Scraping the Nasdaq off the Floor
A 1.7% decline in crude futures prices to below $30 a barrel (natural gas futures dipped 0.7% after yesterday's 11.4% ascent) helped traders mainly overlook Greenspan's warning that the "sharp rise in energy prices, if sustained, is worrisome" because the economy "is obviously at increased risk of untoward events" as it goes through a "transition from unsustainable to more modest rates of growth." (That phrase was also music to traders' ears.) Finally, Greenspan took pains to refute any comparison between the current situation and the fall of 1998, as TheStreet.com's Elizabeth Roy Stanton duly
In an economy that already has lost some momentum, one must remain alert to the possibility that greater caution and weakening asset values in financial markets could signal or precipitate an excessive softening in household and business spending.
Hobgoblins of Consistency, Part 3I have been critical of Greenspan, even going so far as to label him
P.S.As an aside, the term "commercial hedgers" traditionally refers to companies that take positions in commodities markets to lock in prices for raw materials needed for their products, according to Barron's Dictionary of Finance and Investment Terms. In the case of S&P 500 futures, natural hedgers means financial institutions, including the trading arms of Wall Street firms whose strategists have been repeatedly telling clients to buy stocks...
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