This is from yesterday but I just saw. See if you can spot the really really FOS lines....
>>Tuesday November 10, 2:09 pm Eastern Time
Internet stock frenzy unlikely to stop Fed easing
By Huw Jones
NEW YORK, Nov 10 (Reuters) - The froth in cybershares is evidence that the kind of speculation the Fed hates has returned to the market, but the bubble is unlikely to make the central bank more reluctant to cut rates on Nov 17.
Still, the latest Internet frenzy will probably spark few concerns about irrational exhuberance in stocks when the Federal Reserve's chairman Alan Greenspan heads next week's rate setting Federal Open Market Committee meeting.
''There is a speculative froth in the Internet stocks but Greenspan will have to grit his teeth and bear it,'' said Bill Meehan, chief market analyst at Cantor Fitzgerald.
The market capitalization of America Online Inc. (NYSE:AOL - news) now at $33 billion, dwarfs that of veteran blue chips such as J.P. Morgan & Co. (NYSE:JPM - news) which is capitalized at $17 billion.
Strategists said such cyber frenzy hardly translates into a runaway stock market generating asset inflation, and the odds remain slightly in favor of a Fed cut next Tuesday, a move already factored into stocks.
''There is certainly a speculative element in the Internets, but they are one of the fastest growing parts of the market,'' said Jack Shaughnessy, chief investment strategist at Advest.
''This recent rally in stocks has been largely in the big cap names,'' Shaughnessy stressed.
Part of the reason the Fed cut rates twice in September and October was to boost confidence in stocks, strategists noted.
Yikes!!!!!!!
Many Internet shares have raced to new lifetime highs this week as investors savor a rush of consumers to online stores in the coming holiday season.
Yahoo! Inc. (Nasdaq:YHOO - news) was up 11-1/4 at 176. eBay Inc. (Nasdaq:EBAY - news) rocketed 31 to 134. Excite Inc. (Nasdaq:XCIT - news) was up 5-5/8 to 53-1/8.
Many of the Internet stocks have yet to post a profit, though eBay was already making money before its recent initial public offering.
Nevertheless, some investors are taking nothing for granted, and the market pause on Monday and Tuesday is partly due to worry that the Fed may dash hopes on the Street.
''The prospects of a non-rate-cut change is beginning to be reflected in stocks, but I am viewing the weakness here as a buying opportunity,'' Shaughnessy said.
Few expect a big stock selloff should the central bank stand pat next Tuesday.
''Even if Greenspan does disappoint the Street, the likelihood is nothing worse than 8500 in the Dow,'' said Joseph Barthel, chief investment strategist at Fahnestock & Co.
''Momentum in stocks is too strong and it takes a while to snap,'' Barthel added.
The degree of any selloff could be determined by how stocks in emerging markets react to the disappointment.
''It would be too much risk not to cut on the heels of a package to Brazil,'' Meehan said.
Last Friday, the Dow flirted with the 9000 point barrier and was less than 5 percent away from its July record high of 9337.97. Midsession Tuesday, the Dow was off four points at 8893.
''Nobody wanted to go over 9000 unless they have another rate cut in their pocket,'' said Marshall Acuff, portfolio manager at Salomon Smith Barney.
''The market has rallied pretty good, and you don't need to support confidence, which was partly the goal of the second rate cut,'' Acuff said.
Wall Street was disappointed with the Fed's first cut of a modest 25 basis points September 29, but a second, surprise cut of 25 basis points on October 15 triggered a sharp rebound in stocks.
The Dow's rebound, a recovery in overseas stock markets and an imminent International Monetary Fund bailout package for Brazil, have undoubtedly taken some heat off the Fed, analysts said.
Advest's Shaughnessy said the Fed still has enough ammunition to ease.
October's employment data suggested the U.S. economy is getting soggier, and the difference between the 10-year Treasury bond yield and the much higher 10-year low grade debt yield barely narrowed despite two Fed cuts, thus showing that the worrisome credit squeeze is still far from resolved.<< |
