Market Update: When Big Al Speaks, the Nasdaq Listens -- Comp Up Over 7% After Greenspan Speech

The Dow was also near its session high as J.P. Morgan, 3M and Boeing soar.
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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,

Fed chairman

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.

The

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."

TheStreet.com

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

Al Gore's

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.

J.P. Morgan

(JPM) - Get Report

and other financials, including

Citigroup

(C) - Get Report

, were jumping on the assumption of a drop in interest rates.

3M

(MMM) - Get Report

was rallying off news of James McNerney defecting from

General Electric

(GE) - Get Report

to join as chairman and CEO.

And the Nasdaq was seeing big-caps -- including

Cisco

(CSCO) - Get Report

,

Dell

(DELL) - Get Report

,

Intel

(INTC) - Get Report

and

Oracle

(ORCL) - Get Report

-- back in the game.

Even online ad firm

DoubleClick

(DCLK)

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.

Sector Watch

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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Bonds/Economy

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

factory orders

(

definition |

chart |

source

) 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

Reuters

had forecast a 2.7% drop.

Also, the

BTM Weekly U.S. Retail Chain Store Sales Index

(

definition |

chart ), not normally a market-mover, fell 2.6% in the latest week, its biggest drop in over four years.

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