12:17 ET Merrill Lynch comments on Fed policy
Merrill Lynch thinks that the Fed is in no hurry to tighten policy. Fed expects economy to grow 2.5-3% during 2002 with inflation of 1.5%. If forecast is accurate, believes Fed is unlikely to tighten policy. However, Merrill doesn't think Fed's forecast will prove accurate. Firm projecting GDP growth of 3.8% (Q4/Q4) and plans to raise that forecast by about half a percentage pt when it publishes its monthly update Friday. Consequently, Merrill expects Fed to tighten this yr, probably not until late summer or early fall.
11:08 ET Greenspan downplays credit crunch concerns
In Q&A, Greenspan says the Fed does not yet see any significant credit pressure on small business; says it's highly unlikely that there wouldn't be some difficulties, but that they don't seem serious. Says there's nothing the Fed should do, and nothing that needs to be done to address this issue.
10:35 ET IO Input/Output warns for Q1 (7.88 -0.07)
Provider of seismic acquisition technology reduces Q1 outlook to a loss of $0.09-$0.13, compared to First Call mean loss estimate of $0.01. Says continuing weakness of oil and gas prices are resulting in reduced exploration expenditures. "While there are signs of a potential recovery in commodity prices, our customers are generally deferring decisions on nonessential expenditures until later in the year." (volume 3,000 shares)
10:04 ET Greenspan's good news/bad news testimony points to steady policy
True to expectations, Greenspan walked the fence in his testimony. These lines tells it all: "the typical dynamics of the business cycle have re-emerged and are prompting a firming in economic activity. An array of influences unique to this business cycle, however, seems likely to moderate the speed of the anticipated recovery." There's the classic good new, bad news line from Greenspan, which points to a prolonged period of steady Fed policy.
10:03 ET Homebuilders retreat on economic data
After trading up into the New Home Sales data, homebuilding stocks turn defensive. For example, Toll Brothers (TOL 47.60 +0.30) has dropped a full point in the 3 minutes since the numbers were released.
10:01 ET New Home Sales plunged 14.8% to 823K
New Home Sales went in precisely the opposite direction of Existing Home Sales, plunging 14.8% in January to an 823K pace, well below the 940K consensus. This will be a negative for the market, though the mixed readings on Existing and New sales will leave uncertainty about which report is telling the truth - note that the Existing sales survey sample is much larger and therefore more reliable. |
