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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: DiB who wrote (34216)	3/20/2001 4:28:37 PM
From: stockman_scott	Respond to of 65232

Rate Cut Sends the Markets Reeling ___________________________________________ Tuesday March 20 TheStandard.com By Vishesh Kumar <<The Fed announced an interest rate cut of 50 basis points, or half a percentage point, Tuesday, and Wall Street's reaction was extremely erratic. The market built up in the morning, as hopes of a 75-basis-point cut grew. But directly after the announcement, the Nasdaq tumbled in a matter of minutes. Shortly thereafter, the index surged up about the same amount, only to tumble again to the day's lows. At 3:06 p.m. EST, the Nasdaq had dipped 49.01 points, or 2.51 percent. By the same time, the Dow dropped 86.46 points, or 0.87 percent. "The first reaction is usually not the correct one. For that matter, neither is the second," said Barry Hyman, chief investment strategist at Weatherly Securities. "The market will eventually level out toward the end of the day. It was expected, so it was just another event in the market." He added that investors were disappointed that the cuts weren't deeper, and that the Fed's situation would have allowed for a heftier cut. Hyman said that although the cuts were somewhat appropriate, the Fed should have been more aggressive, because of the slowing global economy. "There is a clear difference between how weak Wall Street thinks the economy is and what the Fed thinks," he said. "But they say that there is global slowing, and that is important, because it impacts more people and will take longer to recover from." The Fed, however, signaled that it would be aggressive about cutting rates. Intermeeting cuts are a definite possibility, and some analysts take the latest cut as an overall positive event for that reason. Mat Johnson, a VP of growth-strategy investing at Thomas Weisel Partners, points to the similarity between the latest Fed announcement and the one it issued after its December meeting. "There are further rate cuts to come, and the Fed might go intermeeting," Johnson said. "This should be read as a net positive by investors, but the Fed still has a lot of work to do." Tech stocks moved lower after the announcement. As of 2:40 p.m. EST, Cisco was down 1.78 percent to $20.38. Microsoft was down to $54.50 from the day's high of $56.13. Intel was down to $25.75 from $27.48. Sun Microsystems hit $18.48, down from $19.64. On the Big Board, EMC was at $35.19 from $36.95. Lucent was at $12.25, down from $12.92. Nortel was down to $16.93 from the day's high of $17.99.>>