Dreary heather skies and leaky drizzle compliment the utter lack of excitement on Wall Street this afternoon. Investors sat on their hands, waiting for the
Federal Reserve to conclude its meeting tomorrow, turning the New York Stock Exchange into a parched riverbed that sopped up the meager trickle of trading. All eyes were on the
Federal Open Market Committee meeting -- not the tape.
Markets did very little, just as they have for the past six trading sessions. The
Dow Jones Industrial Average made an upside move on the strength of
Procter & Gamble
, and little else, while the
Nasdaq Composite Index was relatively flat.
Taking a script-page from the soap opera it produces along with a supermarket's worth of consumer goods, P&G was the Dow's
, adding 21 points to the upside. The company's 4.6% gain came as a result of beating Wall Street expectations by a penny a share, while saying
future earnings would come in-line with forecasts. That goodwill was limited to P&G, with the highly competitive sector receiving only a small upside boost on the news. The
Morgan Stanley Consumer Index
gained a paltry 0.6%.
was a notable Dow loser, dropping 78 cents to $114.15. That said, don't cry a river for Big Blue. Today's ease snaps five straight days of gains and is a profit-taking blemish on an otherwise spotless 2001. After trading in a tight range around the mid 90s in early January, IBM has exploded above $110 in recent sessions after it beat earnings estimates on Jan. 17.
Other than that, 24 of the 30 industrials were within a dollar of their opening prices.
Tomorrow the Fed will say what it thinks about the state of the American economy and what actions it will take to remedy the screeching slowdown that has shaken technology and old economy giants alike. Judging by all the chatter and the
fed funds futures, markets are banking on a 50 basis-point cut. As of last check, fed fund futures on the
Chicago Board of Trade
were pricing in a 99% chance of a rate cut, leaving little room for any other option. At least in the market's eyes.
If the Fed were to cut the federal funds rate by a half percent tomorrow, then this would be the first time since 1984 that such a large move was made in such a short time, according to Tony Crescenzi,
chief fixed-income strategist. That was a long time ago, back when then-Fed chief
was forced to drastically slash interest rates after raising rates to the stratosphere in a four-year span from 1979 to 1983.
Giving more gas to the Fed cut was news that consumer confidence levels had crumbled to a four-year low as layoffs and tighter expendable income have taken their toll. The Conference Board announced that its consumer confidence index fell to 114.4 in January, a level unseen since Dec. 1996. The number sideswipes the 124.2 estimate that analysts forecast and undercuts December's 128.6. Pessimism is growing among consumers, a bad sign for the American economy, since unhappy consumers do not spend money.
Aside from the Fed,
was the other most watched thing on Wall Street after
announcing fourth-quarter earnings and making comments about future profits. The mobile handset maker was the most actively traded issue on the Big Board, dropping $2.91 to $34.08. Investors savaged the Finnish giant after it did what rivals
have done in recent weeks -- warning that handset sales were not going to meet expectations.
This news comes at a particularly vulnerable time for industry, which has been reeling from fears that handset sales might be peaking. And today's warning from Nokia, the established leader with 30.6% of the market share, hurts even more. Nokia said it only expects first-quarter results to match the year-ago period on sales growth that is now expected to be in the range of 25% to 30% because of "slower-than-anticipated market growth."
Other than Nokia, technology was pretty quiet, with large-cap tech, telecommunications, boxmakers, wireless, dot-coms and networks all hugging yesterday's close. Semiconductors were the notable exception with the
Philadelphia Stock Exchange Semiconductor Index
gaining 2.5%. Biotechs sold off, a reversal of recent strength. The
American Stock Exchange Biotechnology Index
Volume on the NYSE was thin, while the Nasdaq plied a far brisker trade. Winners beat losers on both.
New York Stock Exchange: 1,644 advancers, 1,309 decliners, 570 million shares. 109 new 52-week highs, 1 new lows.
Nasdaq Stock Market: 1,838 advancers, 1,630 decliners, 1.064 billion shares. 80 new highs, 9 new lows.
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Most Active Stocks
NYSE Most Actives
- Nokia: 27.1 million shares.
Lucent (LU) : 12.4 million shares.
AOL Time Warner (AOL) : 10.5 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Cisco Systems, Inc. Report: 43.6 million shares.
Intel (INTC) - Get Intel Corporation (INTC) Report: 31.7 million shares.
InfoSpace (INSP) - Get Inspire Medical Systems, Inc. Report: 26.3 million shares.
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Hmm. Wow. It was pretty quiet out there overall, since investors are really locked in on the Fed, or simply trading companies that have news and not entire sectors. Chemical names and other defensive areas were getting a bit of a boost, however.
S&P Chemical Index
rose 2.7%, while commodity-related indices also made improvements. The
Philadelphia Stock Exchange Gold & Silver Index
rose 1.9%, while the
Philadelphia Stock Exchange Forest & Paper Products Index
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Treasury prices are up sharply in the longer-term securities as the latest consumer data has justified the market's expectations of a half percent point cut in interest rates this week. Yields, which move conversely to price, are down by five to 10 basis points from the short to the long end.
FOMC meeting is in session and a decision on ongoing monetary policy should be announced by tomorrow afternoon. The weekly store sales data released this morning showed modest improvement and retailers concluded a positive month. But any second-guessing among fed committee members about interest rate corrections may have been eliminated by the plunge in consumer confidence, which fell to a four-year low. Fed chairman
Greenspan has been watching this gauge closely, and its latest dip has sent traders in a flurry of buying. The long bond is now up by more than a point.
The benchmark 10-year
Treasury note lately was up 22/32 to 103 30/32, lowering its yield to 5.220%.
In economic news, the
BTM-UBSW Weekly Chain Store Sales Index
chart ), which is gathered from data submitted by 95 retailers across the country, rose by 0.6% in the week ending Jan.27 after the drop of 0.7% the previous week. The performance was helped by continued discounting of leftover inventory from the holiday season, and the mix of items sold was again primarily from electronics, home improvement items, hardware and toys. The year-to-year average of the index rose to 3.9% from 3.1% as recorded during the week ending Jan.20.
Consumer Confidence Index
) sank to a four-year low with the number for January coming in at 114.4, its lowest reading since Dec.1996. It was also its fourth consecutive decrease and the trend bolsters the case for aggressive easing by the Fed.
Redbook Retail Average
chart ) found January sales after four weeks to be 2.2% ahead of December and 3.3% ahead of last January. The average's target is being met due to robust sales at department stores that have benefited from the markdown of clearance goods. While discount stores slipped in sales during the fourth week, their performance for the month has been steady.
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European markets were mixed at the end of the session.
erased earlier weakness and gained 17.5 to 6334.5. Across the channel, Paris'
gained 15.1 to 5903. Frankfurt's
was off 11.7 to 6739.3.
The dollar hit a one-month high against the euro yesterday. The euro had been slowly gaining against the U.S. dollar amid expectations of a slowing domestic economy. Not lately. It was lately trading at $0.9261 after hitting 94 cents in the past week or two.
Asian markets showed mixed weakness overnight.
Tokyo investors took some profits ahead of the U.S. Fed meeting after rallying smartly during the previous session. The key
closed down 18.63, or 0.13%, to 13,826.65.
Hong Kong stocks churned out some hefty losses due to interest rate jitters and concern over telecom valuations, and the key
closed down 206.75 points, or 1.28%, to 15,893.07.
The greenback was lately falling against the yen, trading at 115.76 yen.
For more on world stock markets, check out
global indices information.
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