MARKET PREVIEW: Techs forget about the Fed

Jan. 2, 2002 4:43 p.m. PT

2 min read

Techs should wash that Greenspan guy out of their hair Wednesday, and move on to other news now that the expected quarter point rise in short-term interest rates has taken effect. Asia was mixed and Europe was up. The Dow is set to open slightly higher.

U.S.

After tiring themselves out by rallying ahead of the big day, the markets floundered after the Federal Reserve Open Market Committee's long-expected rate hike Tuesday. While the Nasdaq moved up, the Dow drifted off. Now that the news of a neutral stance has sunk in, techs can forget about Alan Greenspan and the FOMC gang and get back to their old optimism.

The rise from 5 percent to 5.25 percent in the federal funds rate, or overnight interbank lending rate, was far from a surprise. The FOMC also boosted the discount rate, the rate at which banks borrow directly from the Fed, from 4.50 percent to 4.75 percent, and opted to keep its neutral policy bias.

In new economic news, the July durable goods orders are to be released at 8:30 EST, expected to show a rise of 0.9 percent. July existing home sales are also due out. The news at 10:00 EST is predicted to show a 5.25 million-home annual rate, down from 5.53 million in June.

Expect the following technology stocks to be among Wednesday's most actively traded issues: Newbridge Networks (NYSE: NN), PMC-Sierra Inc. (Nasdaq: PMCS) and Semtech Corp. (Nasdaq: SMTC).

U.S. stocks went on a roller-coaster ride Tuesday before and after the Federal Reserve Board raised short-term interest rates by one-quarter of a percent. The Dow closed off 16 points to 11,283.30 while the Nasdaq added 33 points to 2,752.48.

At the Bell

The Dow Jones industrial average may open about 33 points higher. The Standard & Poor's 500 index for June futures contracts was up 4.0 points to 1375 at 7:25 a.m. EST in 24-hour electronic trading.

The Inter@ctive Week @Net Index rose 0.37 to 296.36.

Asia

Trading in Asia was mixed. The Nikkei 225 fell 1.33 percent to 17,855, Singapore's Strait Times index gained 0.77 percent to 2,136 and Hong Kong's Hang Seng sunk 1.13 percent to 13,479.

Europe

European markets were looking up. London's FTSE 100 grew 1.27 to 6,395. The CAC 40 in Paris added 2.01 percent to 4,632 and the Xetra DAX in Frankfurt was up 1.63 percent to 5,411 at 7:00 a.m. EST.

Reuters contributed to this report.