The "huge" gain in equity prices has fostered a wealth effect that threatens to derail the long U.S. expansion,
said tonight in a sharply worded
A key passage:
Productivity-driven supply growth has, by raising long-term profit expectations, engendered a huge gain in equity prices. Through the so-called "wealth effect," these gains have tended to foster increases in aggregate demand beyond the increases in supply. It is this imbalance between growth of supply and growth of demand that contains the potential seeds of rising inflationary and financial pressures that could undermine the current expansion.
Talk about Greenspan's speech on
Greenspan also said that while observers in 2010 "may conceivably" conclude that today's U.S. economy "was experiencing a once-in-a-century acceleration of innovation," they "might well conclude that a good deal of what we are currently experiencing was just one of the many euphoric speculative bubbles that have dotted human history."
The chairman said the Fed supports the recent rise in market interest rates, as it is "intent on defusing the imbalances that would undermine the expansion." That virtually confirms that the
Federal Open Market Committee
will hike rates by 25 basis points Feb. 2, and hints strongly that a bigger hike is on the table.
Greenspan's remarks were having little effect in the thin evening
futures session, with the
futures up 1.4 to 1459.9 and the
futures up 12.5 to 3665.
wrote about the Fed's growing concern over the wealth effect in a
story earlier today.
John J. Edwards III
posted fourth-quarter earnings of 69 cents a share,
beating the 31-analyst estimate of 63 cents and the year-ago 60 cents. The company cited stronger-than expected demand in what is typically the PC industry's biggest quarter. Fourth-quarter revenue rose to a record $8.2 billion, up 8 percent from a year ago.
Intel said it sees first-quarter revenues slightly lower than fourth quarter levels, citing seasonal factors. The company also said it expects 2000 research and development spending to total about $3.8 billion.
For more on Intel's earnings, see additional
coverage from the
announced that co-founder and Chairman
will relinquish his position as CEO and add the newly created title of chief software architect. The company said longtime No. 2
, the software giant's president, will succeed Gates as CEO.
For more on the latest moves at Microsoft, check out a separate
story from the
Inflows to equity funds totaled $7.9 billion for the week ended yesterday, according to
AMG Data Services
. Large-cap equity index funds reported inflows of $427 million, their largest inflow since last February. International equity funds reported inflows to all regions. Taxable bond funds reported outflows from all sectors, totaling $1.9 billion.
In other postclose news (
earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified
Earnings/revenue reports and previews
posted fourth-quarter pro forma earnings of 6 cents a share, which the company said excludes goodwill and amortization and reflects a 2-for-1 stock split on Dec. 3. On an actual basis the company reported earnings of 4 cents a share, up from the year-ago earnings of two cents. The two-analyst estimate called for earnings of 4 cents.
posted third-quarter earnings of 48 cents a share including a gain of 2, compared with the year-ago earnings of 7 cents. The five-analyst estimate was for 35 cents.
posted fourth-quarter earnings of 44 cents a share, beating the 23-analyst estimate by a penny, and the year-ago earnings of 27 cents. The company said sales for its Avonex multiple sclerosis drug rose to $621 million in 1999 from $395 million in 1998. Biogen said it sees considerable growth potential left in the drug and that it plans to invest about $300 million in research and development in 2000.
For additional coverage of Biogen's
earnings, check out a separate story from the
posted a fourth-quarter loss of 17 cents a share, narrower than the four-analyst estimate of a 24 cent loss and the year-ago loss of 28 cents. The company said it plans to split its stock 2-for-1.
posted third-quarter earnings of 86 cents a share, beating the eight-analyst estimate of 84 cents and the year-ago earnings of 64 cents.
posted fourth-quarter earnings of 62 cents a share, beating the seven-analyst estimate of 60 cents and the year-ago earnings of 48 cents
posted fourth-quarter earnings of $1.34 a share, well above the five-analyst estimate of $1.14 and the year-ago earnings of 84 cents.
said it will report a $13 million pre-tax charge for its fourth-quarter earnings. The after-tax charge of 11 cents a share reflects market-to-market adjustments on certain aluminum hedging contract positions.
posted third-quarter earnings of 49 cents a share, beating the 12-analyst estimate of 47 cents and the year-ago 34 cents.
posted a second-quarter loss of 20 cents, narrower than the eight-analyst expected loss of 27 cents and the year-ago loss of 41 cents.
Internet unit, Staples.com, which intends to have an IPO sometime this year, could lose as much as $75 million as it increases costs from marketing, technology and hiring more staff to join its current 130 employees.
said it will take a $64 million pretax charge in the fourth-quarter for planned retirement of some of its aircraft.
posted fourth-quarter pro forma earnings of 15 cents a share, beating the nine-analyst estimate of 13 cents and the year-ago earnings of 3 cents. The company said the figures assume an effective income tax rate of 32%.
Mergers, acquisitions and joint ventures
American Home Products
said it continued to stand behind its merger pact with
, the terms of which it said remain in full force and effect. The statement came after Warner announced earlier in the day that it was prepared to talk with unfriendly suitor
For more on the newest round of merger talks, check out an earlier
said it would buy the space and communications business of
for $3.75 billion. The deal boosts Boeing's satellite-based revenues by 35% and will open new business opportunities in government programs and air traffic control.
Hughes Electronics owner
said it would realize a pretax gain of about $2.2 billion from the sale, though the specific amount will be determined later.
said a public company made an unsolicited bid to buy it for $125 million in cash and stock. In December, Rainforest said it signed a $111 million merger agreement with
, where each share of common stock held by Rainforest shareholders would be exchanged tax-free for 0.55 of a share of Lakes common stock.
Offerings and stock actions
set a 2-for-1 stock split.
FactSet Research Systems
set a 2-for-1 stock split.
said it plans to split its stock 2-for-1 on or about Feb. 11.
said Kenneth Leibler unexpectedly resigned as president and CEO. Liberty said Chairman Gary Countryman will take on the role of president and CEO of Liberty Financial on an interim basis.
said it named Matthew Massengill as CEO and Thomas Pardun as chairman. Chuck Hagerty has resigned as president and CEO and will retire as chairman, the company said.