If only Wall Street knew what "
Dr. G." is going to prescribe on Tuesday.
Because investors don't know what they're going to get from
Federal Reserve chairman Alan Greenspan (a 50 basis-point cut? A gift of 75 basis points?) and because there is still more bad news about corporate earnings, stocks are suffering. "There's a lot of indecision over Greenspan's thought process," said Bob Basel, director of listed trading at
Salomon Smith Barney
Dow Jones Industrial Average, which managed to edge past 10,000 yesterday, was lately down about 75 points and back below 10K. The
Nasdaq Composite Index was near its lowest levels for the week and off more than 60% from its all-time highs. Many onetime highfliers were again trading at their 52-week lows this afternoon (see below.)
Stronger-than-expected data on
consumer sentiment, released this morning, hinted that the erosion in consumer confidence might be bottoming. Signs of strength in the economy could deter the Fed from a more aggressive rate cut. Right now, the
fed fund futures contract, a good proxy for upcoming monetary policy, is pricing in a high probability of a 75 basis-point cut at the Fed's meeting next week.
"On the basis of economic data alone, the Fed would not consider lowering rates more than 50 basis-points," said Josh Feinman, chief economist at
Deutsche Asset Management Americas
. "But the stock market's performance combined with the fact that confidence is still at a low level may carry the day for a 75 basis-point cut."
Today's losses on the major stock market indices come alongside other data that showed inflation has been restrained. The core rate of February's
Producer Price Index
, which excludes volatile food and energy prices, fell 0.3% -- the biggest drop since Aug. 1993. The overall PPI
Economists had been expecting the core PPI to rise 0.1%. The PPI, a key indicator of inflation at the producer level, has been rising slowly on a year-over-year basis. January's PPI killed the market when it came in at a 1.1% increase -- a 0.7% increase in the core rate. That was the overall figure's highest rise since Sept. 1990 and the core figure's highest since December 1998.
Market internals were poor: Decliners edged out advancers by nearly two to one on both the
New York Stock Exchange and the Nasdaq. Volume was heavy, in part because today is
triple-witching Friday, the quarterly and simultaneous expiration of futures, index options and equity options contracts. The phenomenon is known to cause atypical gyrations in the overall market and can exacerbate market moves as market makers and institutional investors adjust positions by either buying or selling securities or futures contracts.
In company news,
warned about its upcoming earnings results. The company also plans 700 to 900 job cuts. The culprit is well-known: Computer Sciences blamed, in part, the decline in global customer demand for information-technology consulting and systems integration services, as well as reduced demand within the health care market for software licensing. The company was lately down a whopping 37.5% to $34.
was swift to punish the company, banishing it from its recommended for purchase list and slashing its 2001 and 2002 EPS estimates. Computer Sciences' warning came out on top of the less-than-sparkling news released after the close yesterday by
Business-software giant Oracle managed to meet lowered earnings estimates, but
offered no real guidance for future quarters, while PC manufacturer Compaq
lowered first-quarter earnings estimates and said it would cut 5,000 jobs, or 7% of its workforce. Analyst acted quickly against both companies, trimming earnings expectations. Oracle was lately falling 2.9% to $14.31; Compaq was up 1.5%, to $18.80.
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Tech and telecom issues were weighing on Europe's major indices. One of the biggest drags was Dutch chip production equipment maker
, which warned 2001 sales would fall 10% to 25% because of sliding demand in semiconductors.
finished down 73, or 1.4%, to 5105. Germany's
was tumbling 150 to 5746 and the U.K.'s
sunk 166 to 5563.
The euro was last trading at $0.8981.
Asian indices fared better, with Japan's
gaining 80 to 12,233 overnight and Hong Kong's
tacking on 18 to jump to 13,522. Asian markets are being watched closely this week because of fears that Japan's economic problems are starting to hurt investor confidence in the United States.
The dollar was trading at 122.51 yen.
For more on the world stock markets, check out
global indices information.
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