News that the U.S. Supreme Court threw the case concerning the vote recount back to the Florida Supreme Court pushed the Dow and the Nasdaq up initially, but they were lately sliding off those gains.
At first, the news seemed to imply a George W. Bush victory, but upon closer examination, the statement didn't declare a winner in the presidential bid and wasn't indicating any immediate closure. The
Nasdaq reacted accordingly.
Meanwhile, until he could analyze the U.S. Supreme Court's decision, a Leon County, Fla., Circuit Court judge put on hold his ruling that had been expected shortly on Al Gore's request for a recount of some ballots.
The indices had been playing leapfrog earlier, when the Dow shot up from its spot in the red shortly after the opening bell at about the same time the Comp -- which had started on the upside -- took a dive.
The market was digesting a ton of data, including merger announcements, company news and research notes mixed in with some optimistic economic indicators.
Over the weekend,
finally accepted a proposal, worth about $13 billion. The lucky suitor was
, if you haven't already heard. Investors seemed happy with the news and were lifting both parties on the news. It helped that Pepsi said the acquisition would increase its revenue growth rate by 7% annually.
Also attracting attention was
agreement to buy
for about $1.6 billion in stock. Cardinal Health is a health care products distributor, while Bindley Western distributes pharmaceuticals. Cardinal Health was down 6.5%; Bindley Western was up 16.3%.
was an investor favorite this morning after it signed a cross-licensing deal with
and signed a pact of understanding with China's Ministry of Information Industry for deployment of its proprietary CDMA technology in China. The pact with China's government means it may finally do a deal with China's No. 2 wireless carrier
. Qualcomm said China Unicom could begin awarding contracts to build a 10 million subscriber network using the CDMA technology by 2001. Qualcomm was lately up 5.7%.
In an effort to revive an area of tech,
analyst Dave Kang this morning recommended buying such optical networkers as
on "trading weakness." The good news seemed to be working, with JDS up 2.7%, Corning 3.4% higher, and Digital Lightwave lifting 2.3%. The optical networkers were some of the last tech "growth" stocks to fall.
And then there was
, which on Friday called a credit rating downgrade by
"disappointing" in light of the company's turnaround plan.
Moody's cut the company's senior unsecured debt to junk status. In response, the Stamford, Conn., copier- and office-equipment maker said its turnaround plan -- which includes asset disposals, cost reductions and a refocusing of its core businesses -- will allow it to keep sufficient liquidity. According to a report, Xerox, which has been fighting off rumors of liquidity concerns in recent weeks, also handed out layoff notices this week to 200 workers in the Rochester, N.Y., area, on top of 350 administrative staff who were let go last month.
Meanwhile, as more data showing an economic slowdown accumulate, the likelihood grows of a change in the Fed's policy outlook on inflation when it next meets Dec. 19. This is important because a move away from a bias toward concerns about inflation is the first step toward an interest-rate cut. And lower rates help stimulate economic growth by letting consumers and companies borrow money more cheaply.
new home sales came in this morning at 928,000, a little higher than the expected 910,000, but down from the previous month's 946,000. The report measures the selling rate of new one-family houses and is important because, historically, changes in consumer spending patterns have appeared first in autos and housing.
Defensive stocks were strong today. The
Philadelphia Stock Exchange Forest & Paper Products Index
was jumping 2.8%, the
Morgan Stanley Commodity Related Equity Index
was rising 2.96% and the
Morgan Stanley Cyclical Index
was moving up 2.1%.
Internet-related stocks were suffering, with
TheStreet.com Internet Sector
index, or DOT, falling 3.9%, and
TheStreet.com E-commerce Index
dropping 5.8%. Fears of slowing ad sales haven't abated, and there are those who say some Internet companies are still overpriced.
Back to top
Treasuries surrendered some of the gains they made earlier following the Supreme Court's ruling improving Republican candidate
George W. Bush's
chances of prevailing over Democrat
in the presidential election.
The bond market views Bush as the less friendly of the two candidates because -- to a greater extent than Gore -- he would change fiscal policy in ways that would erode projected federal budget surpluses.
Also, news of the ruling boosted blue-chip stock prices, sapping demand for Treasuries. The 10-year note was lately up 5/32 to 101 28/32, yielding 5.497%.
Earlier, Treasuries had posted moderate gains on investor optimism that the
Fed will lower interest rates in the months ahead.
Wall Street Journal
reports that the Fed is "leaning heavily toward" changing its assessment of the economy at the
Federal Open Market Committee's next meeting on Dec. 19. Such a move is seen as the first step in a process that could eventually lead the Fed to lower interest rates.
statement it releases after meetings, the FOMC opts for one of three assessments of the economy. Either the risk of rising inflation is paramount, or the risk of slowing growth is paramount, or the two risks are in balance. Since early 1999, the committee has declared inflation the greater risk. It will probably switch to a risks-balanced assessment on Dec. 19, the Journal story suggests.
In economic news,
new home sales
) fell 2.6% to 928,000 in October, somewhat less than they were expected to, from 953,000 in September. Economists polled by
had forecast a larger drop, to 909,000 on average. Mortgage interest rates have fallen sharply since May, aiding the housing sector.
index of leading economic indicators
) fell 0.2% in October, in line with expectations. The index has fallen or been unchanged for seven months in a row, portending slower economic growth in the months ahead.
Back to top