MARKET PREVIEW: Fed guessing game continues

2 min read

The day of reckoning has finally arrived; all eyes will be focused on Greenspan as he comes out of the Fed meeting at 2:15 p.m. EST Tuesday. Asian markets were mixed, Europe was up, and the Dow is set to open slightly higher.


Though many expect a half-percentage point cut from the central bank Tuesday, some now believe the Federal reserve could opt to cut rates by three-quarters of a point. That would make this the third time the Fed has cut rates this year.

A poll by Reuters showed that, as of Monday, 13 of the 25 biggest Wall Street bond firms forecast a three-quarter-percentage point reduction, while 12 thought a half-point move was more likely.

Investors may also eye Solectron (NYSE: SLR) and KLA-Tencor (Nasdaq: KLAC) Tuesday. Both announced warnings that their upcoming third-quarter earnings will miss expectations.

Expect the following stocks to be among Tuesday's most actively traded: KLA-Tencor warned, Solectron posted quarterly earnings and warned, and IDT reported a greater-than-expected quarterly loss. Net2Phone also reported earnings.

On Monday, investors sat tight, waiting for the Federal Reserve to make a move. The Dow gained 135.7 points to close at 9,959.11, while the Nasdaq rose 60.52 points to close at 1,951.43

At the Bell

The Dow Jones industrial average may open 13 points higher. The Standard & Poor's 500 index for June futures contracts was up 1.5 points to 1182 at 7:25 a.m. EST in 24-hour electronic trading.

The Inter@ctive Week @Net Index rose 11 to 190.21.


Trading in Asia was mixed. The Nikkei 225 fell 42.01 to 12,190.97, Singapore's Strait Times index gained 9.55 to 1,731.70 and Hong Kong's Hang Seng dropped 233.83 to 13,223.86.


European markets were up. London's FTSE 100 rose 69.70 to 5,621.30, the CAC 40 in Paris rose 76.17 to 5,124.77 and the Xetra DAX in Frankfurt was up 106.68 to 5,763.97.

Reuters contributed to this report.