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Greenspan Cools Rate Cut Hopes

Fed Chairman Alan Greenspan cooled hopes that the Fed will continue to cut interest rates aggressively in testimony to the Senate Banking Committee on Tuesday. Stocks rose ahead of Greenspan's testimony, but gave back some of their gains after his speech.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 7 to 360, and the Nasdaq climbed 20 to 2509. The S&P 500 rose 2 to 1332, and the Dow added 6 to 10,952. Volume rose to 468 million shares on the NYSE, but declined to 760 million on the Nasdaq. Advancers led 17 to 11 on the NYSE, and 19 to 14 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

Greenspan said that the "exceptional weakness" in the economy that occurred in December that prompted the most aggressive rate-cutting by the Fed since 1982 did not continue into January. That cooled traders' hopes for another 50 basis point rate cut in March. The Fed lowered growth estimates for the year from 3.25-3.75% to 2-2.5%.

PurchasePro blew out estimates by 12 cents with 11-cent earnings, and raised full-year estimates from 37 cents to 50 cents. But the stock tacked on only 3/4 to 16 11/16 after trading as high as 20 7/16 on the news. B2B spending received a positive mention in Greenspan's speech, but B2B stocks responded only modestly. Ariba tacked on 7/16 to 24 5/16, Commerce One rose 5/8 to 24 15/16, and i2 climbed 3/4 to 41 1/16.

Check Point surged 3 1/2 to 87 3/16 after splitting 3-for-2.

OpenMarket lost 17/32 to 3 1/8 after reporting a 39-cent loss. MarchFirst , down 7/8 to 1 5/8, missed estimates and issued an earnings warning.

Nortel rose 1.62 to 32.19 on news of several contract wins in China.

InfoSpace slipped 3/4 to 4 1/4 after saying it expects to return to profitability in the third quarter, but analysts were concerned about earnings visibility.

Buy.com , up 1/16 to 5/8, and Entrust , down 1 7/8 to 12 1/4, announced CEO resignations.

Juniper , up 4 1/8 to 84, Extreme Networks , up 3 to 33 11/16, and Avici , up 1 1/8 to 25, all rose on positive comments from Merrill Lynch.

CMGI , off 3/16 to 5 11/32, said online advertising weakness may continue for another 1-2 years.

Some technical comments on the market: Note: We are now including charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The Nasdaq (first chart) ran into resistance at its September logarithmic downtrend line around 2550 this morning. To the downside, the index must hold its 1990 logarithmic trendline (second chart) around 2400. That line is probably the single most important support for the bull market of the 1990s. The Fed defended it with rate cuts in October 1998 and January of this year; hopefully Chairman Greenspan is keeping an eye on it.

The S&P 500 appears to be reforming its rising channel, and the quick recovery of its previous support (the gray line) is a hopeful sign.