It's a sign of how sensitive market sentiment is these days that Wall Street can take a beating even when Federal Reserve Board Chairman Alan Greenspan keeps his mouth shut.
Investors had been hoping the Fed chief would drop a good-sized hint about interest rates when he appeared before Congress on Wednesday. Greenspan, however, wasn't in a hint-dropping mood and avoided the subject altogether. Share prices plunged following his remarks, or lack thereof, only to rebound sharply in the final minutes of trading.
The Wired Index rose 0.66 points to close at 383.62. The Dow Jones Industrial Average ended 65.39 higher at 8089.78, marking the fourth straight session of gains.
The Fed's policy-making committee meets next on 29 September, and speculation has been mounting that a reduction in short-term interest rates will be announced. Greenspan suggested as much -- sort of -- in a recent speech when he observed that the threat of inflation in the United States has subsided.
Despite the Fed chief playing it coy this time, rumors still swirl that the Group of Seven industrialized nations are planning a coordinated rate cut to provide a much-needed boost to struggling economies around the globe. For what it's worth, Treasury Secretary Robert Rubin, who appeared with Greenspan before the House Banking Committee, did indicate that the United States is taking a leadership role in salvaging world financial systems.
"What they're trying to do is provide liquidity where there is no liquidity," said Jeff Goverman, research director at Pacific Crest Securities. "Anything that gets economies growing is a positive thing."
But it looks like volatility will remain the order of the day. Without even vague words of hope from Greenspan, traders were forced to look elsewhere for direction. And they didn't like what they saw. For example, a Fed report issued Wednesday said US economic growth may be slowing, and that consumer confidence appears to be on the decline.
Overseas, Moody's Investors Service said it may slash its ratings for three of Japan's biggest lenders -- Dai-Ichi Kangyo Bank, Mitsubishi Trust and Banking, and Toyo Trust and Banking. Such a move would undermine what little confidence is left in the country's anemic banking sector and would deal yet another setback to Asia's recovery.
By the closing bell, though, the mood on the Street was markedly improved. One source of encouragement came from discount broker Charles Schwab (SCH), which served up some good news when it said it expects to earn as much as 35 cents a share in the third quarter, beating analysts' estimates by roughly 15 percent.
Ironically, all the market volatility has been a boon to Schwab, which is seeing big jumps in trading and, hence, commissions. With some of the busiest days ever on the New York Stock Exchange occurring since August, Schwab said its number of daily average trades rose 29 percent last month to 99,600 from a year earlier. The company's shares surged US$3.38 to $40.56.
On the tech front, a seeming rift between Intel (INTC) and Microsoft (MSFT) was sufficient to drive both companies' shares lower. Intel's decision to license its streaming-video technology to RealNetworks -- a move that strengthens a Redmond rival -- suggests that the Wintel partners are no longer joined at the hip on strategic policy. Intel slipped $1 to $84.94, and Microsoft was down 13 cents at $108.19.
Dell Computer (DELL) climbed 19 cents to $60.06 as it cut prices for some of its Windows NT workstations. Sun Microsystems (SUNW) rose 50 cents to $49.50, and Cisco Systems (CSCO) was 19 cents higher at $64.56.
America Online (AOL) advanced $5.31 to $102.81 after telling investors that it expects to get half of all new people who sign up for Internet service in coming years. Brown Brothers Harriman reiterated a short-term "buy" rating for AOL's stock. Yahoo (YHOO), meanwhile, gained $9.31, or 11 percent, to $93.69 as it replaced MCI Communications on the Nasdaq 100 Index.
MCI, of course, is a thing of the past now that its purchase by WorldCom has received final regulatory approval. The newly merged entity, MCI WorldCom (WCOM), rose $1.50 to $47.00.
Qwest Communications (QWST) remained an investor darling as its CEO, Joe Nacchio, predicted the fast-growing telco would see its 1998 revenue increase to about $3 billion. Qwest's shares jumped $2.88, or 9.6 percent, to $32.88.
The Nasdaq rose 11.89 points to 1,690.00, and the S&P 500 was 7.56 higher at 1045.24.
