Stocks End Lower after Greenspan Testimony
After holding on to solid tech gains earlier in the session, stocks slipped to close down amid reduced expectations of aggressive interest rate cuts following testimony from Federal Reserve Chairman Alan Greenspan.
"The street has reacted somewhat cautiously to his testimony because there is very little on which one can hang one's hat," said Alan Ackerman, market strategist at Fahnestock & Co.
"While the significant economic slowdown this year has a way to go, he appeared to be slightly more optimistic," Ackerman added. Investors, subsequently, may have reevaluated how much lower interest rates will go -- to help lift a sagging economy and corporate profits.
Appearing before the U.S. Senate Banking Committee, Greenspan suggested the problems gripping the economy were manageable and the Fed expects the economy to recover in the second half of the year.
Looking at the market long-term, the Federal Reserve should continue to lower rates, helping most stocks to trend upwards, Jerome Schmitt, manager of WesMark Growth Fund, told Standard & Poor's research unit. But Schmitt added the upward movement may not include technology stocks hit by high valuations and earnings shortfalls.
The Dow ended down 43.45 points, or 0.40%, to 10,903.32. The Nasdaq closed down 61.91 points, or 2.49%, to 2,427.70. Meanwhile, the S&P 500, a broader stocks gauge, finished off 11.64 points, or 0.88%, to 1,318.67.
Treasuries ended mixed as equities showed some weakness. Earlier in the session, the government reported January retail sales data, which came in at an increase of 0.7%, surpassing expectations of 0.5%. Retail sales excluding auto sales rose 0.8%. The news gave equities a boost earlier in the session.
Treasuries also kept a close eye on Greenspan's testimony, looking for any clues on interest rates. The U.S. central bank lowered interest rates sharply in January by a total of one full percentage point in its continued effort to stem a broad economic slowdown. As economic reports continue to point to a weakening economy, investors expect the Fed to take an aggressive stance on lowering interest rates.
Stocks to Watch
Vector Group Ltd. (VGR ) said its tobacco unit plans to sell new cigarettes this year that have reduced a cancer-causing agent in the smoke to below carcinogenic levels. Miami-based Vector is the parent company of discount-cigarette maker Liggett Group: Reuters
The global oil and gas price boom poured out $14.2 billion net profit for BP Amoco (BPA ) in 2000, more than double the previous year's $6.2 billion haul but the stock market appeared unimpressed by the figures: Reuters
McDonald's Corp. (MCD ), the world's biggest fast-food chain, on Tuesday said it sees 2001 earnings per share rising 10 percent to 13 percent, excluding the impact of foreign currency: Reuters
A Citigroup (C ) unit will acquire European American Bank, Long Island, NY, from ABN AMRO Bank N.V. for $1.6 billion, plus assumption of $350 million in preferred stock.
Shares of drug firm Pfizer Inc. (PFE ) fell after the drug maker halted a trial of a pain treatment.
After strong gains Monday, European markets ended lower Tuesday. The London Financial Times-Stock Exchange 100 index finished down 12.90 points, or 0.21%, to 6,228.50. In Germany, the DAX Index closed down 6.98 points, or 0.11%, to 6,557.93. Meanwhile, France's CAC 40 ended down 20.45 points, or 0.36%, to 5,739.03.
Asia's markets finished on a mixed note. Japan's Nikkei 225 Index finished down 148.13 points, or 1.10%, to 13,274.70, amid uncertainty around corporate earnings due in the next few weeks. Hong Kong's Hang Seng index, meanwhile, ended up 149.61 points, or 0.95%, to 3,286.70.
By Heesun Wee and Amy Tsao in New York