Market Update: Stocks Skittish as Investors Try to Read Greenspan

<LI>Drugs, PC makers, biotech are up.</LI><LI>Gold, brokerages down.</LI><LI>Cisco, Intel most active on Comp.</LI>

Author:: Kristen French
Publish date:: Feb 28, 2001 10:37 AM EST

Investors weren't sure how to read

Fed Chairman

Mr. G's comments on the economy this morning. And many of them were clearly sitting it out until they could sort through his words.

The major indices jockeyed nervously around the flatline at the open in skinny volume, backing and filling as Greenspan's speech before the

House Finance Committee

unfurled. Breadth was very narrowly positive on both exchanges, with decliners just barely beating advancers on the

Nasdaq and advancers ahead by 13 to 11 on the

NYSE.

In a

printed version of that speech, Greenspan reiterated that the arctic freeze on the economy began to thaw a little in January, but also said that the slowdown has not yet "run its full course," and that the Fed has "quickened" its hand on interest-rate cuts.

Wall Street is hoping Greenspan will tip his hat toward imminent rate cuts sometime during the testimony. Stocks have seesawed in the past several days as expectations wavered over whether or not the Fed will cut rates before its next official meeting on March 20. While the above comments do not necessarily rule out a rate cut before the Fed's official meeting, they don't support such action either.

Tech stocks were all over the map this morning. Even programmable chipmaker

Altera

(ALTR) - Get Report

was on both sides of the flatline. The company said after the close of regular trading yesterday that its first-quarter revenue would fall 20% sequentially. It also got hit by

Lehman Brothers'

analyst

Dan Niles, who

revised his estimates on the company's earnings for the second time in a week. Niles also

jumped on Altera rival

Xilinx

(XLNX) - Get Report

Altera was lately off 0.8% and Xilinx was down 1%. The

Philadelphia Stock Exchange Semiconductor Index

was down 2.8%.

Battered bellwethers networker

Cisco

(CSCO) - Get Report

, fiber-optics leader

JDS Uniphase

(JDSU)

and chipmaking king

Intel

(INTC) - Get Report

were the most actively traded stocks on the Nasdaq. Cisco was up 0.8%, JDS was off 2.3% and Intel was up 2.2%. Mobile-phone maker

Nokia

(NOK) - Get Report

and telecom-equipment maker

Nortel

(NT)

were the favorite trades on the New York Stock Exchange, up 4% and 0.4% in that order.

Meanwhile, data out this morning on fourth-quarter

gross domestic product showed estimates were revised downward to 1.1% annual growth from a previous estimate of 1.4%. Economists had forecasted that the revision -- which entails a more complete calculation of GDP -- would bring the number down to 1%. GDP -- the output of goods and services produced in the U.S. -- has slowed sharply; it was 5.6% in the second quarter of 2000.

But there was good news in the report for the inflation picture. The price index, an important inflation measure, was revised down for the quarter to 1.9%. Economists were expecting it to remain at 2.1%, on par with the advance estimate. But the revised 1.9% is still up from 1.6% in the third quarter. The impact of this number on the market may be limited, because the earlier "advance" estimate was released last month. Plus, most of the data used to calculate this number has already been issued.

The February

Chicago Purchasing Manager's Index

is also due out today. It measures the performance of the manufacturing sector in Chicago and is a relatively good predictor for the broader

National Purchasing Manager's Index. The number signals factory-sector expansion when it is above 50 and contraction when below it. The manufacturing sector has been on the decline the past several months and, in January, the Chicago PMI came in at 40.2.

Sector Watch

Amid volatile trading, there were few definitive sector moves today. Gold stocks and brokerages were making a clear move down, while drugs, biotech and PC makers were making a sustained move up.

Investors began shedding gold stocks yesterday after rocketing them up over a four-day rally. The

American Stock Exchange Gold and Silver Index

was lately off 2.7%.

The downturn in the brokerage stocks wasn't too encouraging. Financials have been weak over the past month, but the sector saw a bit of strength yesterday and some traders were calling that a positive sign for market performance. The

American Stock Exchange Broker/Dealer Index

was lately off 2.3%.

Morgan Stanley Dean Witter

(MWD)

Lehman Brothers

(LEH)

and

Goldman Sachs

(GS) - Get Report

were helping to weigh on the index after their estimates were lowered by

Merrill Lynch

The