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Fed chief spooks stocks
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August 27, 1999: 11:38 a.m. ET
Cautious words from Greenspan prompt Wall St. turnaround
By Staff Writer Malina Poshtova Zang
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NEW YORK (CNNfn) - Wall Street turned around and headed lower at midday Friday, soon as Federal Reserve Chairman Alan Greenspan cautioned a meeting of world central bankers that prices of stocks and other assets should play a major role in determining interest rates.
Shortly before 11:30 a.m. ET the Dow Jones industrial average, which is still trading near a record high, was 35.15 points lower at 11,163.30. Trading volume on the New York Stock Exchange was very light at 210 million shares, and breadth turned negative, with losers ahead of gainers by 1,496 to 1,010.
The Nasdaq composite index fell 13.57 to 2,761.05, and the S&P 500 index lost 6.76 to 1,355.25.
In a speech to the bankers' meeting in Jackson Hole, Wyo., Greenspan said central banks must consider the value of stocks and other assets when determining monetary policy.
The Fed chairman has sent U.S. stock prices falling more than once in the past by warning of the inflationary effects an overvalued market could have. But in his Kansas City speech, Greenspan avoided any mention of the level of U.S. stock markets.
Earlier this week, the Fed raised short-term interest rates by a quarter of a percentage point, a move that had been expected to be the last of its kind for the year.
The stock market's sudden downturn was also seen as a continuation of a sell-off that started Thursday as investors cashed in on profits scored through several days of hefty gains on Wall Street.
The bond market also retreated as a burst of profit-taking entered its second day. The bellwether 30-year Treasury bond fell 1/2 of a point in price, its yield rising to 5.93 percent from Thursday's 5.89 percent.
The dollar was little changed against both the yen and the euro.
Techs show some resilience
Despite the overall weakness in the market, unexpectedly strong results from personal finance software maker Intuit (INTU) helped move its stock higher and gave high-tech bulls reason to buy more of the sector's prominent members.
Shares of Intuit, whose Quicken division is a partner of CNNfn.com, rallied 7-7/8 to 90-3/4 after the company late Thursday reported a smaller-than-expected loss for the fiscal fourth quarter.
Other technology gainers included Dow member IBM (IBM), rising 1-5/16 to 124-1/4, and fellow blue chip Hewlett Packard (HWP), whose stock gained 1-11/16 to 104-5/16.
On the Nasdaq, Intel (INTC) advanced 1-3/16 to 82-1/4.
Among telecommunications issues, shares of Finnish wireless telecom specialist Nokia (NOK) gained 3/8 to 84-5/16 after the company unveiled a prototype of MediaScreen -- a combination of wireless phone, Internet and TV technology.
Finally, investors showed signs of approval for medical device maker Medtronic's purchase of Xomed Surgical Products (XOMD), a maker of surgical instruments for the treatment of ear, nose and throat problems. Shares of Xomed soared 6-1/16 or nearly 12 percent, to 57-5/16, while Medtronic (MDT), which is to pay about $800 million for Xomed, saw its stock fall 2-3/8 to 74-5/16. 
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