Upbeat comments from Federal Reserve Chairman Ben Bernanke and a strong services sector reading dashed hopes for interest rate cuts on Tuesday, sending bond yields soaring and stocks tumbling.
Any hope that the Fed might cut interest rates to stimulate the economy dissipated when the Fed chief said he expects the economy to rebound from its recent slowdown, and the Institute of Supply Management followed with a stronger than expected assessment of the services sector.
Tech stocks managed to outperform the broader indexes, with the Nasdaq losing only half as much as its blue chip counterparts.
Avaya edged higher after the company finalized a buyout deal.
Openwave fell after the company rejected a private equity takeover offer.
Amazon shares continued their run, jumping nearly 5% on the company’s expansion plans in China and positive comments from Bank of America.
Inter-Tel slipped after opting for a re-capitalization over a buyout.
CDC and Navisite
gained on their earnings reports, while Credence
and Sigma Designs
lost ground on their earnings.
Hutchinson slipped on its guidance and layoffs.
Rackable rose after putting its COO in charge of its storage division.
Ciena fell on a convertible debt offering.
The Nasdaq lost 7 to 2611, the S&P 500 fell 8 to 1531, and the Dow lost 80 to 13,595. Volume rose to 2.94 billion shares on the NYSE, and 2.26 billion on the Nasdaq. Declining issues led by an 24-8 margin on the NYSE, and 19-11 on the Nasdaq. Downside volume was 75% on the NYSE, and 66% on the Nasdaq. New highs-new lows were 173-40 on the NYSE, and 146-49 on the Nasdaq.
