Jan 28, 2004 (12:01 PM EST)
TECH STOCKS: Fed's Phrasing Sends Markets Tumbling
Read the Original Article at InformationWeek
Wall Street was having a pretty good day until mid-afternoon, when the Federal Reserve said it would leave its key interest rate unchanged--but hinted that it might raise the rate in the not-too-distant future, sending the markets into a nosedive.
After a two-day meeting, the Fed's Open Market Committee left rates unchanged, maintaining a 45-year low. But in a statement, the Fed dropped its previous wording that rates would be maintained for a "considerable period." Instead, it said, "with inflation quite low ... the committee believes that it can be patient in removing its policy accommodation."
That phrasing change was enough to send the markets tumbling, with the Dow Jones industrials and Nasdaq Composite index hitting three-month lows after being on the plus side earlier in the day.
The InformationWeek 100 fell 5.29 points, or 1.55%, to end at 335.34. The Nasdaq fell 38.67, or 1.8%, to 2,077.37. The Dow fell 141.55, or 1.3%, to 10,468.37, and the S&P 500 fell 15.57, or 1.4%, to 1,128.48. The Nasdaq-100 tracking stock fell 64 cents to $37.10.
A number of tech stocks took it on the chin, including Amazon.com, which fell $3.78, or 6.8%, to $51.96 as concern over declining gross margins overshadowed news of the online retailer's first-ever recorded full-year profit and solid fourth-quarter earnings. Other tech losers included Hewlett-Packard, which fell $1.34, or 5.2%, to $24.28; Cisco, which fell 72 cents, or 2.6%, to $26.78; Microsoft, which fell 54 cents, or 1.9%, to $27.71; and IBM, which fell $1.42, or 1.4%, to $97.38.