Dow zigzags, Nasdaq stalls

The Dow Jones Industrial Average fell as much as 54.32 this morning then surged as much as 124.87 higher after the Federal Reserve chairman spoke about his outlook on the economy before the House of Representatives Ways and Means Committee. However, a late sell-off pushed the blue chip index 19.31 points or 0.21 percent lower, to close at 9,335.91.

The technology-heavy Nasdaq Composite Index, however, was a little more resolute. The index soared as much as 66.21 points but gave back most of the gains to close just 7.4 points or 0.31 percent higher at 2,415.57.

"In addition to some profit taking, there seemed to be some concerns over Brazil and some technical selling once we dropped through some support levels,'' said Bill Meehan, chief market strategist at Cantor Fitzgerald.

Still, the Nasdaq just managed to break yesterday's record close of 2,408.17, mainly on the strength of Microsoft's huge earnings for the quarter.

Shares of the software giant soared 4.5 percent higher today after the company yesterday surpassed expectations, posting a 74 percent increase in profits for its second fiscal 1999 quarter.

The stock beat its 52-week high of 152.5 by closing at 162.63, and was the most actively traded issue on the Nasdaq market with 31.4 million shares exchanging hands today.

"Early runs of fourth-quarter earnings are positive, and Microsoft blew out the doors," said Larry Wachtel, market analyst at Prudential Securities.

PC maker Dell Computer jumped 3.88 percent higher. However, Compaq Computer, and Gateway 2000 edged lower 1.15 percent and 0.11 percent, respectively. Chipmaker Intel shed 0.81 percent.

Web portals Yahoo and Lycos fell 11.11 percent and 7.19 percent, respectively. Excite, coming off of yesterday's big @Home merger news, slipped 12.16 percent. Net retailer Amazon.com also plunged 19.18 percent.

By late morning, Wall Street was buoyed by a speech by Federal Reserve chairman Alan Greenspan.

Greenspan delivered a speech on the U.S. economy to the House of Representatives Ways and Means Committee this morning, which pushed the Dow higher as investors felt reassured by the Fed chief's outlook on the U.S. and global economy.

Brazil's problems center on fiscal issues, including high wage payments in states and a pension system in need of reform, but the country is dealing with the issues, Greenspan told the committee.

"They are clearly coming to grips with that issue,'' he told the House Ways and Means Committee. "It's been very difficult, it's been tough and it certainly has not been helped by the international financial system, which has run into trouble in the last couple of years.''

The Brazilian Congress votes today on a key fiscal bill, the passage of which is viewed as necessary to ease worries about Latin America's economic future.

The bill, which proposes social security charges on retired civil servants' pensions, is a key revenue-raising element for President Fernando Henrique Cardoso's three-year program to slash the budget deficit.

Greenspan also said he would not support investing Social Security funds in the stock market, as proposed by President Bill Clinton in his State of the Union address last night.

"What I do not support and did not support previously was the investment of government funds, especially Social Security trust funds, in private securities, especially equities,'' Greenspan said.

Clinton proposed investing up to $700 billion of Social Security funds in the stock market and subsidizing retirement savings accounts--the biggest change in the U.S. retirement system's financing since its inception 64 years ago.

Greenspan said government investment in private markets would interfere with the efficient allocation of resources in the economy.

Reuters contributed to this report.