Techs rise slightly after Fed rate cut
Technology stocks hold their ground and blue chips gain after the Federal Reserve makes its widely expected half-point interest-rate cut.
The tech-heavy Nasdaq composite index moved up 11.87 points to 1,492.33, and the Dow Jones industrial average was up 113.76 to 8,950.59.
The Federal Reserve this morning announced its ninth rate cut this year. The federal funds rate was lowered to 2.5 percent, its lowest level since the 1960s. The Fed also lowered the discount rate, the interest rate it charges banks to borrow.
"The terrorist attacks have significantly heightened uncertainty in an economy that was already weak," the Fed said in its statement "Nonetheless, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate."
Wall Street's focus may shift to fiscal policy later Tuesday afternoon, said Raymond James & Associates analyst Scott J. Brown, as President Bush is scheduled to meet with congressional leaders in the afternoon.
"The budget outlook for (fiscal year) 2002, which started Monday, has worsened considerably in the last few months--even before the terrorist attack," Brown said. "The bond market will be holding its collective breath."
In tech industry news, Compaq Computer disrupted the PC sector with its announcement Monday that it expects to post a third-quarter operating loss. The company's shares fell 17 cents to $8.16. Analysts said the PC maker's troubles could presage more problems in the industry for computers and large hardware.
"Who in the hardware group will preannounce next?" Goldman Sachs analyst Joe Moore asked in a research note Tuesday. He said it's probable that no companies are immune to Compaq's problems. "The next data point will likely come from Dell, which is doing a Webcast on Thursday and will likely update investors as to its October quarter results," Moore said. Dell Computer fell 1 cent to $18.70.
Siebel Systems was up $1.98 to $15.03 as the company announced the Web-based version of its flagship customer service and sales software and said it struck a deal to buy nQuire Software. Some investors may be assuming the company's current quarter is on track because it made no announcements to the contrary at its analyst meeting in Chicago. We "believe it is unlikely they will preannounce," Rick Sherlund, a Goldman Sachs analyst, wrote in a research note.
Qwest Communications International lost 90 cents to $15.60 after a downgrade from Banc of America. The voice and data services company on Monday said that it is reorganizing its business markets unit and that it signed an agreement for managed wavelength services.
Among other actively traded stocks, Intel fell 49 cents to $19.52; Oracle rose 2 cents to $12.60; Cisco Systems fell 42 cents to $11.48, and Microsoft rose $1.26 cents to $53.05.
Staff and Reuters contributed to this report.