RealTime IT News

Consumer Confidence Fades, Rate Cut Hopes Dim

Stocks got a double-dose of bad news on Tuesday, as another big drop in consumer confidence spurred recession fears, and another Fed official downplayed hopes for an immediate rate cut.

The ISDEX lost 23 to 288, and the Nasdaq plunged 100 to 2207, a new closing low. The S&P 500 lost 9 to 1257, and the Dow slipped 5 to 10,636. Volume declined to 1.1 billion shares on the NYSE, and 1.8 billion on the Nasdaq. Decliners led 15 to 14 on the NYSE, and 25 to 12 on the Nasdaq. For earnings reports, visit our earnings calendar at and reported earnings at For after hours quotes and news, visit our after hours trading site at

Consumer confidence dropped to 106.8, well under expectations for a 111 reading. Future expectations plunged to 68.7, the lowest reading in 7 1/2 years. However, two top Fed officials have cooled hopes for an intermeeting rate cut in the last 24 hours, so traders will likely have to wait until March 20 for the next rate cut. Even so, the Fed funds futures market is still pricing in a 25 basis point intermeeting rate cut, so the pros are betting real money on an intermeeting rate cut. Fed Chairman Alan Greenspan will testify before Congress tomorrow morning. The Fed confirmed yesterday that he is revising his excessively rosy Senate testimony of two weeks ago, a rare step that could mean that Greenspan will hint of further rate cuts tomorrow.

i2 Technologies fell 7 15/16 to 27 9/16 after Nike blamed i2's software for Nike's huge earnings warning. Ariba lost 2 7/16 to 17 1/4, and Commerce One dropped 3 1/8 to 19 1/16.

JDS Uniphase lost 4 5/8 to 28 after announcing that it will lay off 3,000 employees. In a negative sign for the Nasdaq, Cisco broke $25 support, falling 2 to 24. Juniper lost 9 9/16 to 62 9/16. Avanex warned after the bell, putting further pressure on the sector.

Broadcom fell 9 3/8 to 53 5/8 on accounting concerns raised by the Wall Street Journal.

Yahoo lost 2 1/8 to 23 5/8 after speakers at a new media conference said the company was not an attractive takeover target at its current valuation. Analysts also expressed concern about the company's earnings in the weak Internet advertising environment.

eToys announced that it will file for bankruptcy protection, and said its stock has no value.

GoAmerica slipped 7/16 to 4 7/16 despite topping loss estimates.

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:

The Nasdaq broke down out of a 50-point trading range today, setting up the test of 2200 (first chart). Given the lighter volume on the decline, and better new highs/new lows, the index is likely to hold its recent lows around 2150-2200 (2050 is the next strong support below that). However, the index sure looks weak to us. There are absolutely no buyers north of 2300, and the only thing holding up the market here is the threat of further Fed rate cuts; those hopes are being dashed, but the threat is always present. To the upside, the 2300 level is tough resistance, and needs to be broken with force. It is also where the middle of three downtrend lines from September can be found, adding