Expect techs to make a slow comeback Friday, as they come to their senses after Thursday's overreaction to Greenspan's remarks. Asia was down, Europe was mixed, and the Dow is set to open higher.
Upon hearing Federal Reserve chairman Alan Greenspan's noncommittal musings on interest rates in his semi-annual Humphrey-Hawkins testimony Thursday, Fed watchers decided his statement that the Fed will act to "promptly and forcefully" to respond to inflationary signals meant it may raise rates again.
Greenspan also said the Fed "did not want to foster the impression that it was committed in short order to tighten further." Inflation, measured by the Labor Department's consumer price index, is expected not to pick up further after some increases early in the year. The annual rate expected to be between 2-1/4 and 2-1/2 percent.
"Obviously, if we could find a way to prevent or deflate emerging bubbles, we would be better off," Greenspan said. "But identifying a bubble in the process of inflating may be among the most formidable challenges confronting a central bank."
He added that though firm evidence of a bubble was hard to come by, he does suspect the stocks rally is "is being overdone."
Expect the following technology stocks to be among Friday's most actively traded issues: Autoweb.com Inc. (Nasdaq: AWEB), Compaq Computer Corp. (NYSE: CPQ), Gateway Inc. (Nasdaq: GTW), Redback Networks Inc. (Nasdaq: RBAK), Sun Microsystems Inc. (Nasdaq: SUNW) and VerticalNet Inc. (Nasdaq: VERT).
Technology stocks went into a deep funk Thursday afternoon following Fed Chairman Alan Greenspan's semi-annual Humphrey-Hawkins testimony. The Nasdaq plunged 77 points to 2,684.44 while the Dow shed 34 points to close at 10,969.22.
At the Bell
The Dow Jones industrial average may open about 34 points higher. The Standard & Poor's 500 index for June futures contracts was up 4.2 points to 1372 at 7:15 a.m. EST in 24-hour electronic trading.
The Inter@ctive Week @Net Index fell 13.27 to 293.
Trading in Asia also reacted badly to Greenspan's speech. The Nikkei 225 fell 1.10 percent to 17,534. Singapore's Strait Times index lost 3.76 percent to 1,990 and Hong Kong's Hang Seng dropped 2.06 percent to 13,093.
European markets were also dropping. London's FTSE 100 fell 0.63 percent to 6,258. The CAC 40 in Paris lost 0.36 percent to 4,473 and the Xetra DAX in Frankfurt was up 0.12 percent to 5,347 at 6:35 a.m. EST.
Reuters contributed to this report.