(Updated from 4:12 p.m. EDT)
Once again, faith in
healing powers assuaged the market today.
Federal Reserve meeting less than one month away, investors were encouraged by comments from Mr. Greenspan this morning. Bolstering the case for more interest-rate cuts, the Fed chief said in a speech, telegraphed by satellite, to the
International Monetary Conference
in Singapore that inflation is "not a significant problem" for the U.S. economy.
If only for lack of really bad news, stocks traded higher this afternoon. The
Dow Jones Industrial Average closed up 71.11 points, or 0.7%, to 11,061.52. Shares of
advanced 2.1% to $90.83, boosted by a rise in crude oil futures after Iraq halted exports. The broader-market
S&P 500 lifted 6.44 points, or 0.5%, to 1267.11.
In the absence of any major earnings or economic releases this week, Wall Street has turned its attention to corporate preannouncements. Earlier this morning,
cautioned that second-quarter earnings and revenue would be lower than expected. Still, the market was able to shrug off the warning, traders said, because the news is already discounted. Cypress finished up 1.2% to $21.87.
"Most investors have already written off the second and third quarters of this year," said a trader at a large Wall Street firm. "They're looking for signs of stabilization in the fourth quarter."
Added Peter Boockvar, equity strategist at
: "The market is still optimistic about an improvement later this year."
Boockvar said the lack of economic and earnings releases this week will make trading volatile. "Once we get more data, things will hopefully get better," he said. Among reports to be released next week: the
Consumer Price Index and the monthly
retail sales report. For today, trading volume was light, particularly on the
New York Stock Exchange.
Nasdaq Composite inched higher, edging up 6.5 points, or 0.3%, to 2155.9. Networking stocks led the way:
tacked on 3.9% to $44.44, while
gained 4.7% to $19.73.
Philadelphia Stock Exchange Semiconductor Index
, however, was pressured by bearish comments from
; it lost 1.7%. In a research note this morning, Goldman said that last week's warnings from
Integrated Device Technologies
, in addition to weak revenue in April for the industry, place "a downward bias for semiconductor news flow and stock prices near term." Altera fell 1.2%, and IDT rose 1.6%.
, which will issue a midquarter update on Thursday, shed 0.8% to $28.50. Over the past three quarters, Intel has warned of revenue shortfalls in its midquarter reports. Some analysts are preparing for another
disappointment from the company later this week.
In the wake of last Tuesday's preannouncement from
, the Nasdaq shed 4.2% and the Dow 1.5%. A warning from Intel could have a similar effect on the major indices. "Ahead of Thursday's report, people are jockeying their positions in the stock," said Jim Volk, co-director of institutional trading at
Hanging on hopes for an economic and earnings recovery, the Dow is up 17.8% since touching a two-year low of 9,389.48 on March 22. The Nasdaq is up 31.6% from its 31-month low of 1638.8 on April 4. And the
S&P 500 is up 14.9% from its 31-month low of 1103.25 on April 4.
The policy-making body of the Federal Reserve next meets to determine the direction of interest rates on June 26 and 27. The central bank already has dropped short-term rates five times this year, slashing the benchmark rate to 4% from 6.5%. As a result of further deterioration in the economy, the Fed is expected to act again this month. The
fed fund futures market -- a good proxy for the future direction of interest rates -- is pricing in greater than 90% odds that there will be another quarter-point cut.
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European stocks showed muscle today, though the market in Paris was closed for Pentacost. London's
gained 24.2 points to 5833.8, led by strength in oil stocks. Across the channel, Frankfurt's
rose 52.6 points to 6177.7.
The major market averages in Asia ended moderately higher overnight. The
closed up 50.5 points to 13,312.35. Hong Kong's
rose 66.11 points to 13,207.49.
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