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U.S. stocks extend gains
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November 16, 1999: 11:50 a.m. ET
Market players express optimism ahead of Federal Reserve rate decision
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NEW YORK (CNNfn) - U.S. stocks extended early gains at midday Tuesday, with the Nasdaq and broad-based S&P 500 each climbing more than 1 percent. Investors expressed optimism about a Federal Reserve decision on interest rates expected around 2:15 p.m. ET.
Shortly before 11:30 a.m. ET, the Dow Jones industrial average rose 94.51 points to 10,855.26. On the New York Stock Exchange, gainers beat losers 1,693 to 1,030 as trading volume reached 314 million shares.
The Nasdaq composite advanced 41.45 points to 3,260.99, and the S&P 500 index gained 16.11 points to 1,410.50. (Click here for a look at today's CNNfn hot stocks.)
The bond market also advanced as participants largely discounted a potential rate hike. The benchmark 30-year Treasury bond gained 2/32 of a point in price, leaving its yield unchanged at 6.02 percent from late Monday.
The dollar rose sharply against the yen and was little changed against the dollar.
Wait-and-see on Fed
Analysts said it is close call as to whether the Fed will increase short-term interest rates, and the financial markets are in a wait-and-see mode until the Fed policy decision is released.
Market players also await any policy statement that may accompany the decision. At the last meeting on Oct. 5, officials kept rates unchanged but shifted to a tightening bias. The change in bias means the central bank is ready to hike rates should it see any signs of inflation picking up in the economy.
Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum, said either way the Fed goes, it is a "win-win" situation.
"If there is no hike, the market will continue to rally. If there is a hike by a quarter point, (the market) will exact a positive response that this will be the last hike for a while," he said.
Hyman noted investors are looking beyond the Fed decision today as there are many other factors helping the market, such as the recent repeal of Depression-era banking laws.
"We will continue this bull market rally. There will be pullbacks along the way, but the bull market remains intact," he added.
Positive sentiment spilled over into the financial sector. Financial issues are highly sensitive to interest rates, due to the stronger probability of borrowers defaulting on their loans when interest rates rise, therefore impacting corporate earnings negatively.
Among the Dow components, American Express (AXP) rose 2-1/4 to 159-1/2, J.P. Morgan (JPM) added 1-7/16 to 139-13/16 and Citigroup climbed 7/8 to 56-3/4.
Nasdaq marches ahead
After losing momentum Monday, technology issues resumed their climb Tuesday. Recent strength has pushed the Nasdaq to a series of record closes.
Among Nasdaq gainers, Lycos (LCOS) edged up 1/8 to 60 after it reported first-quarter earnings late Monday in line with expectations. The Internet portal netted $714,000 excluding amortization of intangible assets, compared with a $2.58 million loss in the year-earlier period.
Other winners include Intel (INTC), trading up 1-7/8 at 75-15/16, Cisco (CSCO), rising 7/8 to 83-11/16 and Oracle (ORCL), climbing 13/16 to 64-7/8.
However, MMC Networks (MMCN) slumped 4-1/16, or more than 18 percent, to 17-15/16 after the network chip supplier warned late Monday of a potential earnings loss in the fourth quarter.
In the latest development in the pharmaceutical merger saga between American Home Products (AHP), Pfizer (PFE) and Warner-Lambert (WLA), Pfizer said it has amended its lawsuit to stop the planned merger between American Home and Warner-Lambert. Pfizer is requesting an early hearing on its motion to enjoin the merger.
In addition, Pfizer said it forecasts continued robust revenue and earnings growth, including expectations of 16 percent revenue growth through 2002.
All three stocks sagged. American Home fell 3/4 to 55-1/8, Pfizer slipped 1/16 to 34-15/16 and Warner-Lambert dipped 15/16 to 91-13/16.
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