Updated from 2:48 p.m. EST
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Life was but a dream today, as traders sleepwalked through another session while the
Federal Reserve held day one of its
Federal Open Market Committee meeting. After thin trading for much of the morning, interest picked up in the late afternoon, although the market was largely preoccupied by the Fed.
Dow Jones Industrial Average floated higher and higher as the day went on, rising into the afternoon as a bunch of defensive stocks drifted deeper into the green. The blue-chips were broadly positive, with 23 of the 30 in positive territory.
Taking a script-page from the soap opera it produces along with a supermarket's worth of consumer goods,
Procter & Gamble
was the Dow's
, adding 28 points to the upside. The company's 6.4% gain came as a result of beating Wall Street expectations by a penny a share, while saying
future earnings would come in line with forecasts. That goodwill was limited to P&G, with the highly competitive sector receiving only a small upside boost on the news. The
Morgan Stanley Consumer Index
gained a paltry 1.1%.
Around 2:30 p.m. ET, a report surfaced from
, with the company saying its petroleum reserves had increased by 0.9%, or to 21.5 billion barrels from 21.3 billion barrels. That's a pretty good time for ExxonMobil, which just released some huge earnings numbers on the back of skyrocketing crude prices. Investors took notice, upping the company $1.98 to $82.19.
also added a healthy amount to the upside.
, off $1.13 to $63.38, did not.
Tomorrow the Fed will say what it thinks about the state of the American economy and what actions it will take to remedy the screeching slowdown that has shaken technology and Old Economy giants alike. Judging by all the chatter and the
fed funds futures, markets are banking on a 50 basis-point cut. As of last check, fed fund futures on the
Chicago Board of Trade
were pricing in a 99% chance of a rate cut, leaving little room for any other option. At least in the market's eyes.
Giving more gas to the Fed cut was news that consumer confidence levels had crumbled to a four-year low as layoffs and tighter expendable income have taken their toll. The
announced that its consumer confidence index fell to 114.4 in January, a level unseen since December 1996. The number sideswipes the 124.2 estimate that analysts forecast and undercuts December's 128.6. Pessimism is growing among consumers, a bad sign for the American economy, since unhappy consumers do not spend money.
Aside from the Fed,
was the other most watched thing on Wall Street after
announcing fourth-quarter earnings and making comments about future profits. The mobile handset maker was the most actively traded issue on the
NYSE Big Board, and dropped $1.71 to $35.28. Investors savaged the Finnish giant after it did what rivals
have done in recent weeks -- warning that handset sales would not meet expectations.
This news comes at a particularly vulnerable time for industry, which has been reeling from fears that handset sales might be peaking. And today's warning from Nokia, the established leader with 30.6% of the market share, hurts even more. Nokia said it only expects first-quarter results to match the year-ago period on sales growth that is now expected to be in the range of 25% to 30% because of "slower-than-anticipated market growth." Previously, Nokia had bullish prospects about the first-quarter, telling Wall Street that sales growth would come in between 30% and 35%.
Other than Nokia, technology was pretty quiet, with the
Nasdaq Composite Index close to where it opened. Large-cap tech, telecommunications, boxmakers, wireless, dot-coms and networks all hugged yesterday's close. Semiconductors were the notable exception with the
Philadelphia Stock Exchange Semiconductor Index
gaining 1.8%. Biotechs sold off, a reversal of recent strength. The
American Stock Exchange Biotechnology Index
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It was pretty quiet out there overall, since investors are really locked in on the Fed, or simply trading companies that have news and not entire sectors. Chemical names and other defensive areas were getting a bit of a boost, however.
S&P Chemical Index
rose 4.3%, while commodity-related indices also made improvements. The
Philadelphia Stock Exchange Gold & Silver Index
rose 2.1%, while the
Philadelphia Stock Exchange Forest & Paper Products Index
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Treasury prices are up sharply in the longer-term securities as the latest consumer data has justified the market's expectations of a half-percent point cut in interest rates this week. Yields, which move conversely to price, are down by five to 10 basis points from the short to the long end.
The FOMC meeting is in session and a decision on ongoing monetary policy should be announced by tomorrow afternoon. The weekly store sales data released this morning showed modest improvement and retailers concluded a positive month. But any second-guessing among Fed committee members about interest rate corrections may have been eliminated by the plunge in consumer confidence, which fell to a four-year low. Fed chairman Greenspan has been watching this gauge closely, and its latest dip has sent traders in a flurry of buying. The long bond is now up by more than a point.
The benchmark 10-year
Treasury note lately was up 20/32 to 103 27/32, yielding 5.231%.
In economic news, the
BTM-UBSW Weekly Chain Store Sales Index
chart ), which is gathered from data submitted by 95 retailers across the country, rose by 0.6% in the week ending Jan.27 after the drop of 0.7% the previous week. The performance was helped by continued discounting of leftover inventory from the holiday season, and the mix of items sold was again primarily from electronics, home improvement items, hardware and toys. The year-to-year average of the index rose to 3.9% from 3.1% as recorded during the week ending Jan. 20.
Consumer Confidence Index
) sank to a four-year low with the number for January coming in at 114.4, its lowest reading since December 1996. It was also its fourth consecutive decrease and the trend bolsters the case for aggressive easing by the Fed.
Redbook Retail Average
chart ) found January sales after four weeks to be 2.2% ahead of December and 3.3% ahead of last January. The average's target is being met due to robust sales at department stores that have benefited from the markdown of clearance goods. While discount stores slipped in sales during the fourth week, their performance for the month has been steady.
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