Midday Report: Nasdaq Holds Breath Ahead of Fed Statement

U.S. stocks traded in a narrow range early Wednesday, with most benchmarkindexes slightly higher as investors waited for Federal Reserve policymakersto announce an interest-rate cut.

At midday, the Nasdaq Composite Index was up 4.93 at 2843.28. Leading theadvance were Cisco Systems, Inc. (Nasdaq: CSCO), trading at US$38.56, up 56 cents, andIntel Corp. (Nasdaq: INTC), up 75 cents at $37.75.

The Fed’s policymaking committee concludes a two-day meeting Wednesdayafternoon, and is widely expected to announce a cut of at least a half pointin the central bank’s key rate to help spur the flagging economy.

A government report added fuel to the argument for a ratecut Wednesday morning. The Commerce Department said U.S. economic growth slowed in the fourthquarter to a rate of 1.4 percent, the slowest since 1995. In the precedingquarter, the economy grew at a 2.2 percent pace.

E-Commerce Stocks Mixed

The E-Commerce Times Index,which tracks 10 prominent dot-coms, was up 0.49 percent on the day.Priceline.com (Nasdaq: PCLN) and Travelocity (Nasdaq: TVLY) led the advance,while Amazon.com (Nasdaq: AMZN) and eToys (Nasdaq: ETYS) were lower.

Amazon was down 94 cents at $18 in midday trading. After the close oftrading Tuesday, Amazon reported fourth-quarterresults that were ahead of analyst expectations, but lowered itsforecast for revenue in the current year.

Amazon also said it would lay of 1,300 people, or 15 percent of itsworkforce, taking a $150 million charge to earnings in the first half of theyear. Amazon reported an operating loss of 25 cents per share for the fourthquarter ended December 31st, a penny ahead of expectations. Sales for thequarter rose 44 percent from a year earlier to $972 million.

AOL Gains on Earnings

AOL Time Warner (NYSE: AOL) was up $1.35 at$55.66 after the media giant reported results for the fourthquarter ended December 31st that topped analyst expectations by apenny per share. Earnings before extraordinary items rose 14 percent from ayear earlier to $2.4 billion, or 15 cents per share.

Reports that chairman Gerald Levin reaffirmed the newly merged company’soptimistic growth targets for 2001 gave the stock an added boost.

Adobe Falls

Adobe Systems, Inc. (Nasdaq: ADBE) was down $7 at $45.75 after the softwaremaker warned that an economic slowdown would hurt revenue in the firstquarter ending in March.

Applied Materials Inc. (Nasdaq: AMAT) was another casualty, falling 75 centsto $51.69 by midday after warning that a drop in demand for computers andcomponents will hurt results in the current quarter. The company makesequipment used in the manufacture of semiconductors.

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