(Updated from 2:36 p.m. EDT)

Stocks seesawed after the

Federal Reserve announced it cut rates by a half-percentage point, but lately the major indices were positive.

Volume was steadily increasing after the decision to drop short-term rates to 4%. The

Dow Jones Industrial Average, which was off almost 60 points before the rate cut, was lately up about 23 points to 10,900. The

Nasdaq Composite Index, which was up 8 points before the announcement, was lately up about 41 points to 2123.

Volume was very light ahead of the decision, as it had been for the past week in anticipation of the Fed decision. Interest-rate sensitive stocks, including financials, were moving higher in recent action. Tech names, which lost ground yesterday, were also rising modestly.

Wall Street expected the central bank to cut short-term rates by a half-percentage point. But strong retail sales data and consumer confidence numbers released last Friday had raised the specter of a smaller cut. But the Fed said today that it still sees problems ahead for the economy. "The erosion in current and prospective profitability, in combination with considerable uncertainty about the business outlook, seems likely to hold down capital spending going forward," said the Fed's statement that accompanied the rate decision.

Fed Chairman

Alan Greenspan and his band have now slashed rates five times this year, dropping the target-lending rate to 4% from 6.5% at the beginning of the year. The rate is now at its lowest level since November 1994.

Any rally that happens, if one does, could be challenged by technical resistance levels -- for now analysts say that's 2250 on the Nasdaq and

11,000 on the Dow. Resistance levels are key psychological points above which it is often difficult for the indices to trade.

What's more, traders warn that investors may be overly optimistic about future Fed interventions. "The market isn't realistically handicapping whether rate cuts will keep coming," Bill Schneider, head of U.S. equity block trading at

UBS Warburg

, said before the decision. "The next large move could be to the downside, as the market is counting on successive rate cuts to prop itself up."

Stocks soared in April on expectations a corporate profits recession had bottomed and the economy would get better in the second half of this year. But some market pros worry the month-long rally was overdone. As of yesterday's close, the Nasdaq is up 27% since hitting a recent low of 1638.8 on April 4; it remains down 15.7% for the year. The Dow is up 15.8% since its recent low on March 22 and up 0.8% for the year. Small-cap stocks, as tracked by the

Russell 2000, are also positive for the year to date.

There Is Life After the Fed

There's more than just the Fed to digest today, as earnings season gets swinging again after a relatively quiet week. Once the Fed decision is out of the way, investors will begin to

focus more keenly on financial reports, as they provide clues about whether the economy is really coming around.

This morning,

Wal-Mart

(WMT) - Get Report

posted first quarter earnings that were 31 cents per share,

in line with lowered expectations.

Same-store sales rose 3.7%, and Wal-Mart said it expects to return to double-digit earnings growth in the second half of 2001. Home-improvement retailer

Home Depot

(HD) - Get Report

posted results of 27 cents a share, matching last year's results and edging Wall Street estimates by two pennies. In recent trading, Wal-Mart was down 3% to $52.66, while Home Depot was gaining 2.2% to $50.25.

Shares of

Motorola

(MOT)

were lately down 3.6% to $15.16 after the phonemaker said Turkey's wireless carrier

Telsim

missed a loan-payment deadline.

Chip firm

Applied Materials

(AMAT) - Get Report

, software outfit

BEA Systems

(BEAS)

and storage firm

Brocade Communications

(BRCD)

are each rising ahead of their earnings reports, which will be released after the close.

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