Word: dow
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...what did you expect this week - optimism? Wall Street came back from an idyllic East Coast summer weekend with Friday's clouds in tow, using - gasp! - lackluster earnings news from 3M and Lexmark Technologies to sell the Dow off 100 and the NASDAQ off 25 by noon. (Disney presumably did not help matters by announcing that will buy Fox Family for $3 billion - and keep the 700 Club...
...bright side of Greenspan's comments or the dark: Inventory corrections are still going on, businesses are still blanching at the thought of capital investments, and the next six months are going to be very grim indeed. In any case, stocks slid on frenzied volume all morning - the Dow was off 100 and the NASDAQ 50 by noon. In times like these, when we're still waiting for those first six cuts to show up on the economic radar, bearishness from the Fed is not exactly what we've been looking...
...Friday got both the Dow, at 10,539, and the NASDAQ, at 2,084, to levels they hadn't seen in months, because everybody agreed that things were bad but might not get any worse. But everybody also agrees the real turnaround in business spending is a half a year away, and any revivification of the manufacturing sector might take longer than that. So as 1,200 companies air their dirty balance sheets in public this week, what more is there for an investor to get still more excited about...
This year is different. After a brief burst of optimism in May, when stocks rallied for a short time and the Dow reached heights not seen since last fall, the U.S. has heard little but bad news. Last month telecom and fiber-optic giant Nortel (O.K., we know, it's really a Canadian company) announced an eye-popping loss of $19.2 billion for the quarter. Since then, profit warnings have come thick and fast, and commentators have started worrying that the Fed's six rate cuts this year (continued when the Open Market Committee lowered short-term rates...
...pluses - we're entering the time when the first of the Fed's interest-rate cuts should be starting to kick in, and the tax-cut rebates are coming soon. Some retail stores reported some encouraging numbers Thursday as well, and that not only helped goose the Dow but bodes well for consumer spending. On the other hand, layoffs and unemployment is still on the rise...