Plop! Plop! Fizz! Fizz! Oh, what a relief rally it is.
The major indices were looking mighty fine lately, all green and bouncy, and for good reason. They had some more definition to the presidential election, but, more importantly,
Alan Greenspan acknowledged that the economy has slowed substantially and that the central bank must pay attention so that it doesn't slow too dramatically.
The announcement validated what many were already assuming, which was that when the
Federal Open Market Committee meets Dec. 19, it will either cut rates, or at least change its stance toward economic conditions to one that is more balanced and not tempered with fears of future inflation. Either one is positive news for investors. Since June 1999, the Fed raised interest rates six times to slow down the economy.
comments by Greenspan were made in a speech given in New York to the trade group
America's Community Bankers
"Still, in an economy that already has lost some momentum," Greenspan said, "one must remain alert to the possibility that greater caution and weakening asset values in financial markets could signal or precipitate an excessive softening in household and business spending."
took a look at
Greenspan's comments in a separate story.
Meanwhile, the presidential election was looking more and more like a Bush victory after the U.S. Supreme Court threw a ruling over the recount back to the
Florida Supreme Court
and a lower court in the state refused to allow a recount. Vice President
team has appealed the decision.
Back to the market, the
Dow and the
Nasdaq were celebrating with triple-digit gains.
The blue-chip index had plenty of support today.
and other financials, including
, were jumping on the assumption of a drop in interest rates.
was rallying off news of James McNerney defecting from
to join as chairman and CEO.
And the Nasdaq was seeing big-caps -- including
-- back in the game.
Even online ad firm
was higher after announcing it was cutting jobs because of slowing online ad sales. Executive vice president Jeffrey Epstein, at an investors conference, said the reductions will bring the company back to its June 2000 employment level. The company had about 1,980 people at the end of June and had grown to about 2,100 by the end of September.
Banks and brokers were benefiting from Greenspan's comments. The
American Stock Exchange Broker/Dealer Index
was rising 8.7%, while the
Philadelphia Stock Exchange/KBW Bank Index
was moving up 4%.
Money was flowing from the safety sectors like the
Philadelphia Stock Exchange Forest & Paper Products Index
, off 0.5%, and the
Morgan Stanley Commodity Related Equity Index
, down 1.3%, into such newfangled tech sectors as the
Philadelphia Stock Exchange Computer Box Maker Index
, up 6.9%, and the
Philadelphia Stock Exchange Semiconductor Index
, 8.2% higher.
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Treasuries are up strongly thanks to comments by Fed Chairman Alan Greenspan suggesting that the central bank is likely to lower interest rates in the months ahead. The bond market is also benefiting from weak economic news.
The benchmark 10-year
Treasury note lately was up 24/32 at 102 5/32, lowering its yield to 5.457%.
In a speech this morning, Greenspan acknowledged that the economy is at risk of slowing too much, implying that the Fed will lower interest rates to keep that from happening.
The bond market is also benefiting from the news that
) fell more sharply than expected in October. Orders for manufactured goods, an indicator of the health of the factory sector, fell 3.3%. Economists polled by
had forecast a 2.7% drop.
BTM Weekly U.S. Retail Chain Store Sales Index
chart ), not normally a market-mover, fell 2.6% in the latest week, its biggest drop in over four years.
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