Features

Market Brief

Assoc. Press
Thursday January 18, 2001

NEW YORK — Investors went on a technology buying spree Wednesday, but retreated on second thoughts about the market’s actual strength in a decelerating economy. The Nasdaq composite index ended the day with a moderate gain, but blue chips closed lower. 

The pullback reflected Wall Street’s concerns as weak earnings reports flow in. Although many expect the Federal Reserve to lower interest rates again later this month, some question whether it will be enough to reinvigorate the economy and company profits. 

“Are we in a slowdown? Are we in a recession? No one knows,” said Larry Wachtel, market analyst at Prudential Securities. “The market is discounting for what it can see, but it can’t really see that well going forward. That’s the reason why investors are hesitating.” 

After months of worrying about how moderating economic growth would affect corporate profits, investors had a mixed reaction when some of those reports were actually released. Early in the session, they appeared to shrug off a handful of gloomy forecasts, but by late in the day, the jitters returned. 

Sector bellwether Intel slipped 88 cents to $30.50 after initially rising on an earnings report that met expectations but forecast a 15 percent revenue drop for the next quarter. Analysts said the report wasn’t as bad as investors feared, but not good enough to keep the stock up. 

 

— The Associated Press 

 

After the market closed, Apple Computer released earnings that failed to meet already reduced earnings expectations. The stock rose 88 cents in after-hours trading as investors digested the news; it had fallen 31 cents to $16.81 in the regular session. 

Still, analysts were cheered that investors didn’t respond to weak earnings with massive selloffs. 

“Perhaps we’re getting to the time when for most companies, excluding some technology stocks, the bad news seems to be built into the stock price,” said James Meyer, director of research at Janney Montgomery Scott. “But that doesn’t mean we’re going to have a bull market.” 

“We have to decipher whether we’re in a typical slowdown that might last for two or three quarters ... or whether the decline is going to be longer and the turnaround will be a bit later.” 

Wall Street’s hopes for another interest rate cut got a possible boost from a Federal Reserve report Wednesday showing output at U.S. factories plunged by 1.1 percent in December, the biggest setback since the end of the last recession in 1991. The hope is that the data — the latest sign that the economy is slowing — will persuade the Fed to lower interest rates when it meets later this month. 

In another report, the Labor Department said the Consumer Price Index showed inflation at the consumer level rose a moderate 0.2 percent in December amid a drop in gasoline prices. 

Advancing issues outnumbered decliners 13 to 11 on the New York Stock Exchange. Consolidated volume came to 1.62 billion shares, ahead of the 1.44 billion reported Tuesday. 

The Russell 2000 index was up 0.18 at 493.46. 

Overseas, stocks were higher. Japan’s Nikkei stock average rose 0.6 percent. Germany’s DAX index was up 2.3 percent, Britain’s FT-SE 100 gained 1.9 percent, and France’s CAC-40 rose 2.1 percent. 

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