John J. Edwards III
Watch is dead! Long live the Fed Watch!
The most recent nerve-wracking wait for an answer on the Fed's interest-rate intentions came to an end this afternoon with an anticlimactic silence, indicating that the monetary-policy watchdogs wouldn't bite and hike short-term rates. After some initial confusion, the markets embraced the news. The
Dow Jones Industrial Average
jumped 74.58 to 7303.46, while the broader
added 8.39 to 841.66. That's just barely short of the measure's Thursday high of 841.88.
Nasdaq Composite Index
was fired up, rocketing 22.65 to 1363.89. The Jan. 22 high of 1388.06 no longer seems a distant dream.
led the way, soaring 6 1/4 to 160 7/8 behind positive comments from
and other big tech names added to the bull run.
After yesterday's dust-bowl sparseness, volume picked up today. On the
New York Stock Exchange
, 1,410 advancers beat 1,042 decliners on volume of 450.2 million shares. On the Nasdaq, 2,225 advancers led 1,916 decliners on volume of 548.1 million.
The bond market also responded positively to the Fed's inaction, with the yield on the benchmark 30-year Treasury bond falling to 6.90%.
Accurate seers gloated a bit after the Fed news came down, just as faulty prognosticators licked their wounds. "I was wrong," said Barbara Marcin, senior equity portfolio manager at
Citibank Global Asset Management
. But she found a silver lining in the nonmove's likely effect on the markets. "It seems to confirm that we can continue to have an extended economic cycle," she said. "That's very positive for the stock market. I guess it makes me think a little more favorably about the financial stocks."
Those stocks expectedly rallied after the announcement, with Marcin's own
up 4 1/8 to 120 1/8,
up 3 7/8 to 96 1/2 and
up 2 1/2 to 117 1/2.
Hugh Johnson, chief investment officer at
, predicted the Fed nondecision and applauded it this afternoon. "I think that whereas economists and strategists debated the outcome, investors did not," he said. "It was very clear that investors believed the Fed would not raise short-term interest rates. It's clear that they did the rational thing, given that there are signs that the economy is slowing and inflation is benign."
But Johnson said it won't be all roses in the weeks ahead. "Unfortunately, when we wake up tomorrow we are going to see two familiar problems or hurdles," he said. "Valuations are high, stocks are very pricy. And Federal Reserve policy -- now that we can stop worrying about what they're going to do May 20, it's now time to worry about what they're going to do July 2. Life never gets quite good enough in this business."
looks like it did the right thing in spinning off
Electronic Data Systems
. The computer-services company's troubles continue, with EDS late
yesterday announcing that its second-quarter earnings will fall short of expectations. EDS gave up 1 1/4 to 36 3/4.
GM, which reached an agreement with China that makes it the leading candidate for a $1 billion project, was up 1 1/2 to 57 3/8.
also previewed poor second-quarter results, paying a harsher price than did EDS. The company's shares plunged 5 1/2, or 22%, to a 52-week low of 19 7/8 after it said it expects to earn between 20 cents and 25 cents per share. The
consensus estimate is 40 cents.
traded up 2 to a 52-week high of 99 5/8 in anticipation of its post-close earnings report for the first quarter. The numbers came in big, with earnings of $1.08 per share. The First Call expectation was 93 cents, and the company earned 42 cents a year earlier.
plans to buy a 47.5% stake in humorless
from Microsoft co-founder Paul Allen. The stock-for-stock deal will see Allen become an 11% owner of HSN. HSN bounced 3 5/8 to 30 and Ticketmaster leapt 2 1/8 to 14 1/2.
announced plans to merge in a stock swap that
valued at $430 million -- before today's trading sent Registry shares plummeting. REGI lost 6 1/2 to 49. Renaissance, whose holders are to receive 0.8 of a Registry share for each Renaissance share, gained 2 1/2 to 36 1/8.
jetted up 2 3/4 to a 52-week high of 37 7/8 after announcing that it plans to buy back most of the US Airways preferred stock owned by
-- not to be confused with Merrill Lynch -- soared 5 1/2, or 22%, to a 52-week high of 30 after the company reported first-quarter earnings of 94 cents per share. That was far ahead of First Call's estimate, 62 cents, and the year-ago 54 cents.
tacked on 1 to an all-time high of 60 3/4 after reporting first-quarter earnings of 53 cents per share, 2 cents better than the First Call expectation and up from the year-ago 41 cents.
turned in a big upside surprise, reporting first-quarter operating earnings of 53 cents per share. The First Call estimate was 40 cents, and the company earned just 16 cents a year earlier. Dayton Hudson shares bounded 2 to a 52-week high of 49.
slipped 3/4 to 31 1/2 despite reporting first-quarter earnings of 15 cents per share, 2 cents ahead of the First Call view and up from the year-ago 8 cents.
was off 1/8 to 13 7/8 after saying it has the potential to increase sales by $8 billion to $10 billion, which would put annual sales at $34 billion to $36 billion. The company said it plans to aggressively pursue its new Big Kmart concept, which has been put into practice at 300 stores so far.
Lone Star Steakhouse & Saloon
said the decline in its stock price stemmed from concerns over its weak same-store sales. The stock fell 1 7/8 to 19 3/8.
moved up 1 3/4 to a 52-week high of 52 on an upgrade to near-term buy from accumulate at Merrill Lynch. The firm maintained a long-term buy rating.
Stolt Comex Seaway
splashed up 1 5/8 to 21 7/8 after
initiated coverage at buy.
gave up 1 1/4 to 81 1/2 on a downgrade to market perform from the recommended list at
fell 1 1/4 to 17 1/8 after
downgraded the stock to attractive from buy.