The Salina Journal from Salina, Kansas on April 19, 2001 · Page 2
Get access to this page with a Free Trial

The Salina Journal from Salina, Kansas · Page 2

Publication:
Location:
Salina, Kansas
Issue Date:
Thursday, April 19, 2001
Page:
Page 2
Start Free Trial
Cancel

A2 THURSDAY, APRIL 19, 2001 Fed / Surprise rate cut jolts Wall Street f ROM PAGE A1 The Nasdaq rose 156.22, or 8.1 percent, to 2,079.44, reaching the 2,000 level for the first time since March 15 and posting its fourth-best daily percentage gain. The Standard & Poor's 500 rose 46.65, or 3.9 percent, to 1,238.18. The market's early, earnings- inspired gains were not a surprise; stocks have been moving higher this month, including the Nasdaq's four-day winning streak last week, its first such advance since early September. Wall Street has been encouraged by the market's recent stability despite poor earnings reports. Investors also expected stocks to recover somewhat after the major indexes suffered their worst first quarter in decades, when even the Dow industrials — considered the safest havens on Wall Street — slipped briefly into bear market territory However, the rate cut was quite unexpected. Analysts said the market was particularly pleased by the Fed's move because it was bigger and sooner than anticipated, coming ahead of the Fed's mid-May meeting. The Fed's decision also helped propel trading volume to record levels — an all-time best 3.18 billion shares on the Nas­ daq and the second-best of 2.25 billion on the New York Stock Exchange, well ahead of 1.31 billion on Tuesday. "It energized the market right on the spot," said Alan Ackerman, executive vice president for Fahnestock & Co. "The market was really waiting for a catalyst, and this Fed move appears to have been just that." But analysts cautioned that the market remains vulnerable after months of losses and volatility and that it was too soon to tell if Wednesday's momentum would last. "You have to take a wait-and- see attitude," said Ricky Harrington, a technical analyst for Wachovia Securities. The Fed's move came shortly after the Conference Board reported that its Index of Leading Economic Indicators, used as a forecasting tool, fell during March, signaling continued weakness in the economy Investors have been hoping the Fed would cut rates more aggressively to stimulate the economy and ultimately send profits and stock prices higher. Some of the Dow's lift came from General Motors, IBM and J.P Morgan Chase, all of which released earnings Wednesday that pleasantly surprised Wall Street. GM rose $3.17 to $56.80 after announcing it made 50 cents a share, well ahead of the 26 cents analysts anticipated. IBM, which reported earnings that met expectations after the market closed, gained $6.31 in extended-hours trading, nearly doubling its performance in the regiilar session, where it closed up $6.80 at $106.50. Banker J.P. Morgan Chase reported it earned 70 cents a share, 4 cents higher than expectations. It advanced $3.73 to $49.10. Analysts said one of the most encouraging aspects of Wednesday's rally was the fact investors were swayed more by good news than by earnings warnings from high-tech bellwethers Cisco Systems Tuesday and Hewlett- Packard Wednesday Cisco rose $1.35 to $18. Hewlett-Packard, which also announced it will cut up to 3,000 management jobs, rose $2.65 to $31.90. "The strength in tech stocks is looking much better," said Harrington, the Wachovia analyst. "There has been a continued series of negative reports that the market has shrugged off. It is the best sign, in layman's terms, that the market is ready to move up." Advancing issues outnumbered decliners about 2 to 1 on the NYSE. The Russell 2000 index rose 10.93 to 466.51. Local / Rate cut should help here FROM PAGE A1 By the end of the day, the Dow Jones industrial average was up 399.1 points, and the Nasdaq composite index was up 156.222 points. That euphoria could be felt on Main Street through renewed optimism and lower borrowing cost. "It's going to spur people on," said Glenda Krug, broker/owner of ReMax Advantage Realtors, 415 E. Iron. She expressed relief that a long, snowy winter and a cool economy might finally be ending. "It's going to help us all the way around." Larry Reiswig, president of Central National Bank, 454 S. Ohio, said the interest rate cut could be the jolt the economy needs. The Salina economy, he said, "wasn't progressing forward. It was going sideways." The interest rate cut will make home loans more affordable for many families. He said the rate for home loans will be in the "high 6s to low 7s." He expects most banks will drop their commercial loan rate from 8 to 7.5 percent, and that could spark spending. "It makes a big difference in the cash flow for the borrower," he said. "I'd say it's more palatable to borrow money if they're looking at a project." Considering the commercial loan rate in February was 9.5 percent, it's a 2 percent drop in as many months. But a rate cut will tend to put a "squeeze" on bank profits, he said, because banks fund their SERVICE 823-7512 SUNFLOWER CRIME PERS Sometime during the night of March 24, 2001, a Coca Cola "Powerade" vending machine was tipped over at South High School, 730 E. Magnolia. The vending machine was located near the softball diamonds when it was tipped over causing extensive damage. Total loss is estimated at $1,200. If you have any information concerning who committed this crime, call Crimestoppers at 825-TIPS. You may receive a cash reward of up to $1000.00, and you are not required to give your name. '^^^ Salina Journal Sponsored by: Connecting communities with information loan portfolios with customer savings. Reiswig said it might stand to reason that interest rates paid to savers would drop as well, but that's not always the case. "To keep deposits, you have to maintain CD rates," he said, referring to certificates of deposit. "You have less margin to work with." Certificates of deposit are paying almost 5 percent interest for six to nine months on minimum deposits from $5,000 to $10,000, he said. Krug said the weather had a lot to do with slow winter real estate sales. "Higher-dollar properties were not moving as fast as we're used to in Salina," she said, but a better interest rate could give that market a needed nudge. Just don't expect an instant change, Reiswig said. "When you do an interest rate cut, the Fed typically thinks it takes a while to take hold and filter through the economy," he said. "I don't expect it to take hold tomorrow. It might take a month or two to see positive signs, but it's certainly a step in the right direction." • Reporter Tim Unruh can be reached at 823-6464, Ext. 137, or by e-mail at sjtunruh@sal journal.com Pool & Spa The DaNclDislurb Matlnss' BETTER SLEEP I SJst All 7 Pieces for $699 7 Piece Room G^^ 5 Piece Oak Dinette colonial Oak Dinette Solid Wood ——————™~ ' ~^ Nitestands starting at $4 China Cabinet =^599 Nostalgia Cak 48' Ball & Claw tabled 4 Double Press Back Side chairs ND1330/ND1311 OAK HOME 3-Piece Deluxe, ENTERTAINMENT Entertainment CENTER Center • Oak Solids & Veneers • Three Piece Oeiuxe • Brass & Glass Doors "-'aWeii waii Unit .• 1691 B;ass & Glass Solid Wood Dresser Base Fe Pine ainment «nt8 ara 1^ of r{(^ Avetage Oaiy Balance, wBi cfKt) anfDval L LMme FVca Guarantee oidudad on II mal oileis. Fn evtr^^ •IW y»» B»*H«. lyou Irt • towpnoi dumg tie UaUne ol tie 6 lilantie No JnleresI evaiaUe on seleclecl appiances and eMnria at 23m APfl. IM ina sale item per lamly. Sonie (ems an MMd quanlbs. KM reeponsM ijawe5el.wlbeatanylerilimatapnc»ttoniatMal«tweitoctoigtne8anienewllemlnataclo^ • - -- . -. . - eudmo(M.in1relund^ttie%iance.OuiUetiriieFVic8Quannte<ltnolappkattle^ oltiei tMad otten/Altei MalHn Hetate, Alter Faooiy flebale. Sittlaf B IliS^^ (sadil aintnal. Financa cTiarges will not IM ripcsed on these pijti^^ uierA^iaridaKlrate APR£e%laracixiiiitsy<tiicliara|iapla>^ .DetiMmitOne ^-^alenwa. - llaM Ite. iMtonier buys 38220922 system oc hUier. gel> a S49M kMalalion ceit^ maffcs and trademarks Mriong to their respedm ornien. ''^"Sitisi ^-SMasS

What members have found on this page

Get access to Newspapers.com

  • The largest online newspaper archive
  • 11,100+ newspapers from the 1700s–2000s
  • Millions of additional pages added every month

Try it free