Any hopes of an immediate cut in short-term interest rates evaporated Wednesday when Federal Reserve Chairman Alan Greenspan told Congress that although the U.S. economy continues to stagnate, the central bank would likely wait until its March 20 meeting before adjusting lending rates.
Investors weren't pleased with the news as the Nasdaq composite shed 56 points to finish at 2,151.82, while the Dow Jones industrial average lost 142 points to close at 10,495.15.
Greenspan told Congress Wednesday that the slowdown hitting the U.S. economy "has yet to run its full course." But he also hinted it hasn't slipped enough to prompt another interest rate cut, saying the Fed had responded to the problem.
On the economic front, the gross domestic product (GDP), which measures the value of all goods and services produced within U.S. borders, grew at a revised annual rate of 1.1 percent during the October-December quarter, the slowest pace in five and a half years, the Commerce Department said. The government initially had estimated that fourth-quarter GDP rose 1.4 percent.
"The optimism that we had earlier this week that we might get a pre-emptive cut is going away," said Todd Clark, head of listed trading at WR Hambrecht. "The market is looking at everything being negative right now, so we're going to sell off."
Greenspan added that the central bank will act as necessary to help the economy, but prefers to act according to its schedule. He also noted that the economy appeared to be stronger in January and February than in November and December.
Shares of Elantec (Nasdaq: ELNT)--a maker of high-performance analog integrated circuits for the video, optical storage, communication and power management markets--fell $10.88 to $19.81 after the company said it would miss estimates for its second quarter.
Intel (Nasdaq: INTC) clipped 44 cents to $28.56, while Advanced Micro Devices (NYSE: AMD) and IBM (NYSE: IBM) lost 63 cents and $2.69 a share, respectively.
Altera (Nasdaq: ALTR) shares slid 25 cents to $23.13 after the programmable logic device maker issued a profit. Xilinx (Nasdaq: XLNX) inched up 13 cents to $38.88 despite concerns it may do the same next week. Altera said Tuesday it expects first-quarter sales to drop 20 percent from the $368 million posted in the fourth quarter.
Among widely held PC stocks, Dell (Nasdaq: DELL) lost 38 cents to $21.88, Compaq (NYSE: CPQ) fell 20 cents to $20.20, Gateway (NYSE: GTW) rose 48 cents to $17.20 and Apple Computer (Nasdaq: AAPL) finished off $1.13 to $18.25.
Avanex (Nasdaq: AVNX) tumbled $4.56 to $19.38 after it warned it would miss sales and earnings estimates for the third quarter.
Microsoft (Nasdaq: MSFT) trimmed 38 cents to $59. Oracle (Nasdaq: ORCL) lopped off $2.69 to $19 and Sun Microsystems (Nasdaq: SUNW) picked up 6 cents to $19.88.
Shares of JDS Uniphase (Nasdaq: JDSU) fell $1.06 to $26.75, two days after the company announced it would lay off 3,000 workers amid slowing growth. Ciena (Nasdaq: CIEN) closed off $2.56 to $67.19.
ZDII staff and Reuters contributed to this roundup.