Market Update: Stocks Slip Slightly After Fed Holds Rates Steady
After so many days of driving the market lower on election uncertainty, the major indices were having their second day of gains.
The
Nasdaq and the
Dow Jones Industrial Average were lately slipping from highs of the day after the
Federal Reserve said it would hold interest rates steady at 6.5%. At the same time, the monetary policy making body said the risk of rising inflation remains higher than the risk of an economic slowdown
Tech stocks were getting a hefty boost from semiconductors today after chipmaker
Analog Devices
(ADI) - Get Analog Devices Inc. Report
posted fourth-quarter earnings that
beat analysts' estimates by 4 cents. Bonus time. The company forecast "solid" revenue growth over the next few years. The stock lately was up 19.6%.
The news helped lift the
Philadelphia Stock Exchange Semiconductor Index
4.9%. Blue-chip but recently battered semiconductormaker
Intel
(INTC) - Get Intel Corporation Report
was up 4.7%.
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Applied Materials
(AMAT) - Get Applied Materials Inc. Report
was hopping 4.1% ahead of releasing its earnings after the closing bell.
Chips were fighting the negative vibes from
Network Appliance
(NTAP) - Get NetApp Inc. Report
, which lately was 18.7% lower. The networking data storage company announced earnings that beat estimates by a penny, but it tempered the solid earnings with a forecast of slower sales growth. On the news,
Bear Stearns
downgraded the stock to attractive from buy.
Another naysayer on the Nasdaq was software company
Micromuse
(MUSE)
, which last week reported better-than-expected earnings, but lately was hurt by concerns of slowing growth. It lately was down 8.5%.
On the
NYSE,
Hewlett Packard
(HWP)
was giving back yesterday's gains. Hewlett has taken quite a ride in the past two days, tanking Monday on news it missed earnings estimates by a dime and then rebounding yesterday as investors decided tech stocks looked oversold. It was lately 3.7% lower.
Financials were hurting after
Bank of America
(BAC) - Get Bank of America Corporation Report
said fourth-quarter charge-offs, which are bad loans that are treated as a loss, could be more than double third-quarter levels. It was 8.6% lower. The
Philadelphia Stock Exchange/KBW Bank Index
was sliding 1.7%. Bank of America, along with
First Union
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, was hurt by a troubled loan made to
Sunbeam
(SOC)
. First Union, which was hurt by this yesterday, was off another 1.6%.
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Sector Watch
Paper stocks had strength today. The
Philadelphia Stock Exchange Forest & Paper Products Index
was rising 1.9% on consolidation fever in the industry.
Georgia-Pacific
(GP) - Get GreenPower Motor Company Inc. Report
said yesterday that it expected its $7.5 billion bid for
Fort James
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to close "very soon" after its recently extended regulatory review. Also yesterday,
Weyerhaeuser
(WY) - Get Weyerhaeuser Company Report
confirmed that it had financing for its proposed acquisition of
Willamette Industries
(WLL) - Get Whiting Petroleum Corporation (New) Report
.
Energy stocks were strong, with the
American Stock Exchange Natural Gas Index
3.3% higher and the
Philadelphia Stock Exchange Oil Service Index
increasing 3.7%.
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Bonds/Economy
Bonds slid a bit, but then sprung back after the
Fed announced there would be no change in interest rates and no change in its inflation outlook. There was a minority opinion that the Fed would move to an opinion that showed no further interest rate increases would be likely. Instead, the Fed said inflation still poses a threat to the economy.
The benchmark 10-year
Treasury note was up 9/32 before the announcement. It lately was at 100 6/32, up 11/32, to yield 5.725%.
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