Stocks Take A Break

Stocks took the day off Thursday a day after soaring to record gains on a surprise Federal Reserve rate cut.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 24 to 357, and the Nasdaq gave back 49 to 2566. The S&P 500 fell 14 to 1333, and the Dow slipped 33 to 10,912. Volume rose to a record 2.1 billion shares on the NYSE, but declined to 2.6 billion on the Nasdaq. Advancers led by 15 to 13 on the NYSE, and 21 to 17 on the Nasdaq. The Labor Department will report December's employment data tomorrow morning, and traders will be looking to see if that's what got the Fed so worried. 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.

Inktomi fell 4 3/4 to 13 3/4 on an earnings warning. CacheFlow lost 4 7/8 to 13 1/4.

The Fed's rate cut had an immediate effect on telecom service providers, who are heavily dependent on the credit markets to raise money. McLeod , up 2 7/8 to 19 5/8, and XO Communications , up 7/8 to 20 15/16, rose on news that they were raising new capital in the bond market. Metromedia Fiber rose 3 5/16 to 16 1/4, and Global Crossing rose 3 1/2 to 21 3/16. There were also rumors that GX could be a takeover target. XO's and McLeod's news was good for telecom equipment providers, who have been hard-hit by worries about slowing capital spending by service providers. Interestingly, XO and McLeod were the first two to go back to the credit markets after the Fed cut rates in 1998.

Online brokers also benefited from the rate cut. E*Trade rose 1 5/16 to 10 13/16, and Ameritrade added 1 37/64 to 9 13/16.

Yahoo fell 1 3/16 to 29 3/4 on negative comments from Lehman Brothers analyst Holly Becker. The company reports earnings next week.

JDS Uniphase fell 5 1/4 to 48 3/8 on rumors that the company may have trouble making its quarter.

BMC Software soared 6 5/8 to 22 1/4 on a positive earnings pre-announcement.

Vitria plunged 4 to 4 on an earnings warning. Resonate , down 7 7/16 to 3 13/16, also warned.

barnesandnoble.com tacked on 11/32 to 2 3/16 after announcing an eBooks imprint, Barnes & Noble Digital.

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

Well, we expected some jitters after the dramatic Fed rate cut, and so far the market hasn't disappointed. Rumors abounded this morning that another fiasco like the Long Term Capital debacle of 1998 was in the making, and others were wondering if the economy is headed for recession. Not unreasonable speculation, given the unprecedented Fed action. But we have to wonder if Alan Greenspan isn't also a pretty good market technician, in addition to being a not-half-bad central banker. This is the second time Greenspan & Co. have come to the market's rescue after the Nasdaq's 1990 logarithmic trendline was pierced, the first time being in October 1998 (see first chart). Perhaps Greenspan realizes the importance of technology to the strong productivity gains of recent years. His timing probably had mor