The market was treading lightly ahead of the
Federal Reserve's interest-rate decision that is expected shortly.
Dow Jones Industrial Average and the
Nasdaq Composite Index have spent today's trading session bouncing around the upside. There wasn't much leadership that pulled stocks in one direction or the other, just bits of upward movement across the board.
Brad Zipper, trading manager at
Herzog Heine Geduld
, said his firm has seen traders, without knowing what
Alan G. and his bunch will announce, wanting in on the action.
Fed funds futures have already fully priced in a 50-basis-point interest rate cut, but they're also pricing in a 32% chance of a larger cut of 75 basis points. Many investors say the bigger rate cut is unlikely. It would indicate there's more to be concerned about the health of the economy than originally thought. There is more
weak economic news out today. A day after
consumer confidence fell to a four-year low, the
gross domestic product showed the economy slowed more than expected in the fourth quarter of 2000.
The preliminary estimate of GDP showed the economy grew 1.4%, the smallest rise since the second quarter of 1995. It was well below the 1.9% pace expected by economists and the third quarter's 2.2% increase. The GDP price index -- a key inflation measure -- came in up 2.2%, ahead of forecasts for a 2% rise and the third quarter's 1.6% rise. Gross domestic product measures the change in the market value of goods, services and structures produced in the economy, while the price index measures the prices of everything -- including imports -- that Americans buy.
Stocks that would benefit from a rate cut were getting a nice lift lately. The exception was financials, with broker, bank and insurance stocks all on the slide. These companies typically gain with the prospect of lower rates since cheaper loans beef up their business.
Retailers were the winning sector of late from the looks of the
S&P Retail Index
, up 3.5%. Blue-chips
were making healthy gains.
Also, contributing to its positive side, were
. Last night, the Air Force announced that Boeing's McDonnell-Douglas unit won a $1 billion contract to develop improvements for the C-17 aircraft carrier. ExxonMobil was benefiting from upgrades at
The recently combined multimedia giant
AOL Time Warner
was edging up 2.5 after reporting earnings that were
being seen favorably by investors.
Semiconductor equipment maker
was one of the most actively traded stocks on the Nasdaq after warning that its first-quarter earnings would miss estimates. The stock lately was edging 0.5% lower.
, a maker of business management software, was on the decline after posting better-than-expected earnings and a positive outlook. Why was it sliding? The market was expecting even better results from the company. Lately, the stock was down 13.2%.
As far as what happens after the Fed makes its call, Zipper said the market could still sell a bit even if the Fed cuts by half a percentage point. Anything less, he said, and the market will "get creamed."
Breadth was positive, meaning more stocks were moving up than moving down, on moderate volume.
New York Stock Exchange: 1,827 advancers, 1,198 decliners, 600 million shares. 173 new 52-week highs, 2 new lows.
Nasdaq Stock Market: 2,030 advancers, 1,548 decliners, 1.1 billion shares. 99 new highs, 12 new lows.
Back to top
Most Active Stocks
NYSE Most Actives
- AOL Time Warner: 15.4 million shares.
General Electric (GE) - Get General Electric Company (GE) Report: 11.4 million shares.
Nokia (NOK) - Get Nokia Oyj Sponsored ADR Report: 10.4 million shares.
Nasdaq Most Actives
- Intel (INTC) - Get Intel Corporation (INTC) Report: 33.4 million shares.
Cisco (CSCO) - Get Cisco Systems, Inc. Report: 32.8 million shares.
Applied Materials: 21.8 million shares.
Back to top
Even though component Applied Materials, which is the world's largest maker of semiconductor manufacturing equipment, warned about its first-quarter earnings, the
Philadelphia Stock Exchange Semiconductors Index
was climbing 3.4%. The sector started on a steady decline at the beginning of September, hitting lows in December. Since then, the SOX, as it is known, has been crawling its way back up.
was having a bunch of fun, 8.5%.
Oil-related sectors were edging upward on some analyst upgrades. The
American Stock Exchange Oil & Gas Index
, up 1.1%, saw such components as
get upgrades from
Chicago Board Options Exchange Oil Index
was rising 1.1%.
Back to top
Treasury prices are up as traders wait for the Fed's decision.
The long bond has been selling higher by about a point on news that the Treasury department is being asked by the
Bond Market Association
to eliminate the 30-year following the August 2001 auction. The longer end of the market is also benefiting from the auction next week of $11 billion and $10 billion in 10-year notes and the 30-year bond respectively. Yields are down slightly, by less than five basis points for all securities.
The money market has been solidifying over the last two days on expectations of aggressive Fed easing, and economic data released this morning did little to change the prevailing outlook. Except for the private real estate market, which gained substantially, the macroeconomic and manufacturing numbers came in very low, justifying analysts' opinion that the central bank will go a long way in helping the economy.
The benchmark 10-year
Treasury notelately was up 12/32 to 104 7/32, lowering its yield to 5.181%.
In economic news, the
Mortgage Applications Survey
) indicated a decline in mortgage and refinancing activities. The purchase index was down to 298.1 in the week ending Jan.26 from 332.6 in the previous week. Its base is 100 from 1990. The refinancing index slid to 1992.1 from 2123.3.
gross domestic product
), which measures the change in total output of products and services in the country, grew by 1.4% in the fourth quarter of 2000. This is lower than the rate of 1.9% forecasted by economists in a
poll, and the slowest pace of growth since the second quarter of 1995.
Chicago Purchasing Managers' Index
chart ) dropped to 40.2 in January from 45.2 in the previous month. The prospects were for a drop to 43.2, and the current reading is the lowest since Nov.1982. Expansion of factory activity is considered positive when the gauge is above 50.
New home sales
) shot up more than expected by 13.4% in December to 975,000 units sold, and are at their highest level since Nov.1998. Low mortgage rates account for the raised number, which stands at 90,000 units more than the level economists had been expecting.
Back to top
Major European markets were mixed at the close of the day.
was down 37 to 6298. Across the channel, Paris'
rose 81 to 5999. Frankfurt's still-rallying
is up 38 to 6777.
The euro has been slowly gaining against the U.S. dollar amid expectations of a slowing domestic economy. It was lately trading at $0.9302.
Asian markets showed mixed weakness overnight.
Tokyo stocks ended slightly higher overnight following a session of profit-taking Monday. The key
closed up 16.90, or 0.12%, to 13,943.55.
Hong Kong stocks rebounded overnight, and the key
erased all of the previous days losses plus a couple of points more, closing up 209.28, or 1.32%, to 16,102.35.
The greenback was lately falling against the yen, trading at 116.52 yen.
For more on world stock markets, check out
global indices information.
Back to top