Those searching for some sort of resolution to the ongoing
interest-rate saga didn't get it today.
And if you were sick of reading about and hearing about every bit of economic data that's released and the market's reaction to it, adjust, get over it and get used to it. Because it's most likely going to be more of the same for a while after today's Fed inaction and sort-of action. At its meeting today, the
Federal Open Market Committee
left its target for the federal funds rate unchanged but adopted a bias toward raising rates.
The Fed decision: Join the discussion on our
The news out of Washington wasn't exactly a surprise. The vast majority of Wall Street expected the FOMC to leave the target for the fed funds rate unchanged. There was some dispute among analysts on whether the policymaking board would shift to a tightening bias.
About five minutes before the results of the big meeting were announced, the
Dow Jones Industrial Average
was up about 100 points; the
was up 10 points, while the
Nasdaq Composite Index
was up 37 points.
After the results of the FOMC meeting were announced, a bout of selling hit stocks and sent major market averages well off their best levels of the session. The S&P 500 and the small-cap
tumbled first into the red. The S&P promptly rose out of negative territory, while it took the small-cap gauge a little longer. But within 30 minutes of the announcement, all the major averages -- including the Nasdaq Comp, the last holdout in the plus column -- had slumped under water.
And in the end, major stock proxies closed mostly lower, but the losses were slim and well off the session's lows.
The 30-year Treasury bond, which had spent the session trading around the flat line, ended up suffering huge losses. The 30-year Treasury bond tumbled 1 5/32 to 99 9/32, yielding 6.18%.
Jay Suskind, head of institutional equity trading at
, said the big stock selloff caught him by surprise but the rebound was nice to see. The trader said the market's volatility shows that people on the Street aren't sure what the Fed is going to do. Suskind sees the Dow continuing a trading range in the low 10,000s.
Although the FOMC adopted a tightening bias, the panel pointed out that doesn't mean it's a done deal it's going to hike rates in November. In its
statement, the FOMC said although it "was biased toward a firming of policy going forward" the panel members "emphasized that such a directive did not signify a commitment to near-term action."
The crucial medium-term question of whether the Fed will raise rates at its second-to-last meeting of the year, Nov. 16, won't be answered until everyone gets a look at economic data -- if even then.
"The answer is, we don't know," said Alan Skrainka, chief market strategist at
in St. Louis. He added that the Fed doesn't even know, because it doesn't know what upcoming economic data have in store ahead of the next FOMC meeting. He said that because of the Fed's concerns about the tight labor market, upcoming employment data will be critical. If the upcoming employment data are strong, chances are they'll raise rates, Skrainka said.
Analysts won't have to wait long to get a look at jobs data. On Friday, the
will release the September
. Beyond that, the October jobs report is set to hit the market Nov. 5.
Skrainka pointed out that the S&P 500 has undergone a 10% correction and said that almost always represents a good opportunity to buy stocks, because only one time out of four does a 10% correction turn into a bear-market drop of 20%.
As for the upcoming earnings season, he said he thinks the market will see the strongest earnings growth in five years in the third quarter.
The Dow slipped 0.64 to 10,400.59. The S&P 500 gave up 3.25, or 0.3%, to 1301.35. The Nasdaq Comp added 3.69, or 0.1%, to 2799.66. The Russell 2000 dipped 0.60, or 0.1%, to 426.01.
TheStreet.com Internet Sector
index jumped 12.41, or 1.9%, to 668.02.
Corporate news was dominated by official word that
agreed to buy
in the biggest deal in history. MCI WorldCom fell 5.1% on the news, while Sprint fell 3.3%.
Bank stocks, which were soaring before the afternoon Fed news, saw a marked reversal in their fate. The
Philadelphia Stock Exchange/KBW Bank Index
had risen as much as 2.4% intraday, but plunged on the word from the Fed. The BKX eventually closed down fractionally.
profit warning helped doom the
Philadelphia Stock Exchange Oil Service Index
to an abysmal session. The index tumbled 5.4%, while Halliburton swooned 13.2%.
New York Stock Exchange
, decliners beat advancers 1,783 to 1,222 on 965.7 million shares. Meanwhile, on the
Nasdaq Stock Market
, losers beat winners 2,097 to 1,818 on 1.21 billion shares.
On the NYSE, 145 issues set new 52-week lows while 54 touched new highs. On the Nasdaq, 118 issues set new 52-week lows while new highs totaled 92.
On the Big Board,
was most active with 24.8 million shares changing hands. It gained 1 1/4 to 45.
On the Nasdaq, MCI WorldCom was most active with 58.9 million shares changing hands.
Among other indices, the
Dow Jones Transportation Average
gained 20.63, or 0.7%, to 2979.73; the
Dow Jones Utility Average
fell 2.47, or 0.8%, to 303.40; and the
American Stock Exchange Composite Index
said goodbye to 5.18, or 0.7%, to 784.65.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 51.80, or 0.7%, to 6990.50 and the
Mexican Stock Exchange IPC Index
lost 54.95, or 1.1%, to 4989.66.
Tuesday's Company Report
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.
Sprint lost 2 to 58 7/8 after MCI WorldCom forged a $115 billion deal to acquire the No. 3 long-distance carrier in the largest corporate buyout ever. MCI WorldCom upped its offer to counter rival
higher bid. Shares of MCI WorldCom fell 3 5/8, or 5.1%, to 67 15/16, while BellSouth slipped fell 5/8 to 41 13/16. According to the agreement, MCI WorldCom said it would pay $76 in stock for each Sprint share, while each share of
would be exchanged for 1 new
tracking share. Shares of PCS dropped 4 11/16, or 6%, to 74. After the merger, MCI WorldCom said Sprint CEO William Esrey would serve as chairman, while MCI WorldCom CEO Bernard Ebbers has been tapped as president and CEO. Ebbers called the deal "pro-competitive" and said it would not result in any layoffs.
wrote about what BellSouth's next move might be in a
story last night.
climbed 9/16 to 42 5/8 after saying it would not enter a rival bid for Sprint and said it would sell its 10% interest in the company. Deutsche said it would rake in a $9.8 billion profit from the sale, revised upward from an earlier estimate.
Mergers, acquisitions and joint ventures
inched up 3/4 to 34 1/2 after it said it is considering strategic options for its
division, which closed down 1/16 to 12 1/16. The company said that a tax-free spinoff of the unit appears to be the most viable alternative, but it is in talks with a special committee of Arch Coal board members to discuss other solutions.
added 1/8 to 43 13/16 after
The Wall Street Journal
reported that it inked a $2 billion agreement with
to change 44 jets into freighters, while providing ongoing maintenance for the international delivery service.
lost 1 1/4 to 56 1/2 after saying it would provide 34 of the 44 Boeing 757-200 aircraft used in the deal.
lost 3 7/8, or 10.5%, to a year-low of 33 1/8, after it unveiled plans to buy
which was jolted 5 7/8, or 33.2%, to 23 9/16, in a cash-and-stock deal valued at $2.6 billion. The agreement calls for DTE to pay $28.50 for each share of MCN. DTE said, including MCN's debt, the acquisition is worth roughly $4.6 billion.
slipped 3/4 to 76 3/16 after saying it plans to acquire
for $500 million.
added 7/16 to 32 1/16 after saying it inked a $120 million stock deal to buy
Athletic footwear maker
was trampled 7 1/4, or 27.9%, to 18 3/4 after saying it expects to report record third-quarter earnings and revenues but sees a slowdown in the first quarter of 2000 due to retailer uncertainty.
lowered its long-term rating on K-Swiss to accumulate from buy.
slipped 1/4 to 46 1/4 after saying it is hooking up with
so that Exodus customers will be able to use Oracle software. Shares of Exodus gained 2 3/16 to 68 7/16.
lost 5/16 to 18 1/2 after saying it signed a $700 million, 10-year computer services agreement with
Harvard Pilgrim Health Care
. Perot Systems will help Harvard implement and manage computer systems, restructure its claims department and improve its technology infrastructure.
fell 1 1/2 to 44 1/4 after saying it would pay $180 million to buy the
, a central Illinois daily newspaper, along with a group of seven community newspapers known as the
Illinois Valley Press
, from San Francisco-based
Earnings/revenue reports and previews
flew 27 1/2, or 20.3%, to a record 163 1/2 after saying it expects to post third-quarter revenue between $36 million to $38 million, beating internal expectations. The company made its trading debut Sept. 28 at $25 a share.
gained 2 11/16, or 14.4%, to 21 5/16 after it said it expects to meet analyst estimates for the third quarter, due to strong sales growth in Europe, Asia and Australia.
moved up 3 1/4 to 79 5/8 after last night posting a narrower-than expected fourth-quarter loss. Today
Deutsche Banc Alex. Brown
raised their 2000 earnings estimates on the stock.
fell 1/4 to 18 9/16 after saying it would report third-quarter earnings between 8 cents and 14 cents a share, greatly missing the four-analyst estimate of 45 cents a share and the year-ago 43 cents.
tacked on 2, to a record 48 1/8 after saying it expects to post third-quarter earnings between 56 cents and 60 cents a share, beating both the 14-analyst estimate of 51 cents and the year-ago 40 cents.
Offerings and stock actions
, a maker of integrated telecom systems, jumped 6 5/8, or 66.3% to 16 5/8 in its trading debut. The shares were priced at $10, the bottom of the expected price range.
was in need of some repair, falling 5 3/16, or 44.4%, to 6 1/2 today. In an effort to fix up the stock, the company announced an up to 4 million share buyback plan. Yesterday the company said it would miss earnings estimates.
, one of Israel's largest cellular telephone operators, said its board approved plans for an IPO in the U.S. and Europe.
raised the expected price range of its IPO to $10 to $12 a share from $8 to $10 a share. The company, which develops and sells semiconductors, plans to raise about $38.3 million in the offering.
got a lackluster reception on its first day of trading with the stock closing flat at $12.
initiated coverage on four automotive industry companies.
climbed 1/2 to 51 13/16 after it was placed on the recommended list.
climbed 1 3/16 to 65 3/8,
Delphi Automotive Systems
was unchanged at 15 7/16 and
fell 1 1/2 to 48 5/8 after all three were rated market outperformers.
slipped 3/16 to 65 after SG Cowen lowered its rating to buy from strong buy.
was unchanged at 18 13/16 despite a nod from
which initiated coverage with an attractive rating.
climbed 7/8 to 50 13/16 after Goldman Sachs raised its rating to market outperform from market perform .
crashed 8 3/16, or 11.9%, to 60 9/16 after
cut its rating to outperform from buy. Lehman said it is slightly more cautious in its revenue estimate because of a delay in an outsourcing deal with
Electronics For Imaging
rose 3 9/16, or 6.7%, to 56 7/8 after
Morgan Stanley Dean Witter
upped its rating to strong buy from outperform.
was looking pretty dull, down 6 3/4, or 8.8%, to 69 3/8 despite a lift from Lehman Brothers which raised its price target to 150 from 100.
xrose 1 11/16 to 184 after
Warburg Dillon Read
began coverage with a buy rating.
edged up 7/8, or 7.4%, to 12 3/4 after
US Bancorp Piper Jaffrey
lowered its price target to an $18 to $20 range from $30 but maintained a buy rating. The company said yesterday it sees lower than expected earnings for the quarter.
lost 1/8 to 27 13/16 after PaineWebber started coverage with an attractive rating.
inched up 1/2 to 15 after
Banc America Robertson Stephens
initiated coverage with a strong buy and set a price target of 20.
fell 1 1/16 to 32 15/16 despite
Credit Suisse First Boston's
buy rating to kick off coverage.
fell 1 1/4, or 6.2%, to 18 7/8 after Morgan Stanley sliced its rating to neutral from strong buy. Meanwhile
BancBoston Robertson Stephens
, raised its rating on the stock to buy from long-term attractive, despite SunGard's warning that third-quarter earnings will fall short of expectations. BancBoston cited a SunGard's low price-to-sales and P/E multiple.
inched up 3/16 to a new high of 50 7/8 after PaineWebber initiated coverage with a buy rating.
lost 1 3/4 to 43 15/16 after PaineWebber sliced its rating to attractive from buy.
added 3 3/8, or 5.2%, to 67 15/16 after the company unveiled a line of its
personal computers starting at a suggested retail price of $999.
jumped 3 1/8 to 140 11/16 after saying it plans to introduce an online trading and financial advisory service called
American Express Brokerage
slipped 1/4 to 19 7/8 after it announced plans to divide its electronic instruments division into two subunits. The division will be split into an aerospace and heavy vehicles unit and a process and industrial products group.
AT&T climbed 1 1/4 to 45 after the company said it plans to offer Web hosting services to small businesses, allowing them to create and manage their own sites.
rose 15/16 to 51 1/4 after saying it plans to launch an aggressive expansion, including opening 40 new discount stores and 160 to 165 new supercenters. Separately, the company posted an October same-store sales increase of 7.2%, down from the year-ago 9.5% increase, while total sales were $15.7 billion, beating the year-ago $12.4 billion.