graphic
Markets & Stocks
Nasdaq surges post-Fed
December 21, 1999: 6:08 p.m. ET

Fed policy triggers broad gains; Nasdaq posts largest point gain and record close
By Staff Writer Jill Bebar
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - U.S. stocks posted solid gains Tuesday, with the Nasdaq scoring its largest point gain in history as investors reacted favorably to the Federal Reserve’s decision to keep short-term interest rates steady and maintain a neutral bias.
    The Nasdaq composite rallied 127.28 points, or 3.36 percent, to 3,911.15. The index posted its 56th record close for the year and surpassed its previous record point gain of 108.87 set Sept. 3.
    The Dow Jones industrial average rose 56.27 to 11,200.54, and the S&P 500 index advanced 15.34, or 1 percent, to 1,433.43.
    Breadth was positive on the New York Stock Exchange, with gainers narrowly beating losers 1,580 to 1,506. Trading volume reached an active 963 million shares.
    Treasury prices fell, with the bellwether 30-year bond losing 9/32 of a point, raising its yield to 6.46 percent from 6.44 percent late Monday.
    In currency markets, the dollar fell against the yen and rose against the euro.
    
No action from Fed

    At its monetary policy meeting, the Federal Reserve kept the federal funds rate at 5-1/2 percent, noting "market uncertainties” regarding Y2K as a factor. The central bank also maintained a neutral bias.
    Although analysts did not expect the Fed to tighten interest rates, many expected the central bank to shift to a tightening bias, a sign it was ready to hike rates should it see signs of inflation picking up. The next meeting of the Federal Open Market Committee (FOMC) is in early February.
    "Y2K fear kept them from tightening. We probably would have had a tightening or at least gone to a tightening bias,” said Brian Conroy, head of listed trading at J.P. Morgan.
    Wayne Angell, chief economist at Bear Stearns, agreed, saying the Fed was focused on Y2K and wanted a "smooth transition” heading into the new century. (638K WAV) or (638K AIFF)
    Nevertheless, Peter Cardillo, director of research at Westfalia Investments, noted the bias was somewhat insignificant in that the central bank could change its mind at any time.
    At the last FOMC meeting on Nov. 16, the Fed increased the federal funds rate by a quarter of a percentage point to 5-1/2 percent and shifted to a neutral bias.
    
Tech stocks surge post-Fed

    Technology shares continued their winning streak, with the Nasdaq composite surging on the back of the Fed announcement. The index closed above 3,900 for the first time and analysts remained bullish in their forecasts for the market.
    Ralph Acampora of Prudential Securities said the Nasdaq should pierce the 5,000 mark next year.
    

    
graphic

    

    Joseph Battipaglia, chief investment strategist at Gruntal & Co., also sees room for growth. "Technology is where investors want to be. It is where the upward momentum is,” he said.
    But Battipaglia warned of a possible pullback within the sector. "We could see a sizeable correction on these stocks. They could get hit hard when the momentum breaks down,” he said.
    Internet stocks led the upward movement. Amazon.com (AMZN) gained 2-7/8 to 99-7/8 and Yahoo! (YHOO) jumped 36-1/16, or nearly 10 percent, to 405-9/16. Yahoo! benefited from research data that said its Internet service is now five times more popular than its closest rival.
    Internet advertising company DoubleClick (DCLK) also boosted the sector. The stock gained 15-1/8 to 216-1/2 after announcing a 2-for-1 split Monday.
    Nasdaq component CMGI (CMGI) also contributed to gains, surging 48-1/16, or more than 21 percent, to 270-1/4 after Merrill Lynch initiated coverage of the Internet investment company late Monday and said the stock could trade at $300 within a 12 to 18 month period.
    Gains in Intel (INTC) provided support to the Dow industrials as well as the Nasdaq. The world's No. 1 chipmaker’s stock advanced 1-13/16 to 82-7/8 after it said late Monday it formed a new business group to focus on wireless communications.
    Among the tech bellwethers, IBM (IBM) edged up 15/16 to 110-1/8 in wobbly trade, and Microsoft (MSFT) shook off the day’s losses, rising 3-1/8 to 115-7/8.
    On the earnings front, 3Com (COMS) late Tuesday posted fiscal second-quarter earnings of 37 cents a share, excluding special items. The results beat Wall Street expectations of 36 cents. The maker of computer networking products reported results after the 4 p.m. ET close of New York trade. During regular trading hours the stock jumped 4-1/4 to 53-1/8. The shares fell to 50-5/8 in after-hours trade, according to Instinet.
    Micron Electronics (MUEI) sank 1-3/8, or more than 11 percent, to 11 despite that the computer maker reported a profit of 15 cents per share after the market close Monday against analysts’ forecasts of 14 cents.
    In earnings-related news, CSX (CSX) tumbled 5-1/4, or more than 15 percent, to 29 after the transportation company late Monday warned of worse-than-expected fourth-quarter earnings.
    Losses in CSX spilled over to other transport issues, with the Dow Jones transportation average slumping 47.97 to 2,836.50, the only major index to end in negative territory.
    (Click here for a look at today’s CNNfn hot stocks.)
    (Click here for a look at today’s CNNfn technology stocks.) Back to top

  RELATED STORIES

Asian shares close lower - Dec. 21, 1999

  RELATED SITES

View the latest market update via Netshow

See how your mutual funds are doing

Need investing advice? Try Quicken.com on fn

Track your stocks


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.