Wall Street was comfortably higher in mid-afternoon trading Wednesday while awaiting word from the Fed as to what, if anything, will happen with interest rates. An announcement was expected later in the day as Greenspan & Co. wind up a two-day policy meeting.
Most traders were expecting the Fed to leave rates alone for the present, but to also signal that a future increase is likely if the US economy continues growing at such a healthy clip.
The Dow Jones Industrial Average gained 48.40 points to 9322.52, and the Nasdaq Composite Index was 12.61 higher at 2476.03. The S&P 500 rose 3.15 to 1265.14.
Although market players feel they have a good sense of the Fed's mood, they know too that Alan Greenspan possesses a flair for the dramatic, and seems to enjoy nothing so much as defying expectations and proving onlookers wrong.
"There's always the element of uncertainty," admitted Ulric Weil, an analyst with Friedman, Billings, Ramsey. "Even if he doesn't do anything, it's the words and music that go along with it. That's what everyone is listening for."
While waiting, investors bided their time by punishing Cisco Systems (CSCO) for not coming through with a much-hoped-for stock split. The network-systems leader slipped 64 cents to US$111.75 despite topping estimates with a 33 percent increase in quarterly profit to 36 cents a share. This prompted Lehman Brothers to raise its 12-month price target for the company's shares to $125.
Internet stocks received a boost after Yahoo Chief Executive Tim Koogle told a global economic forum that, even at current sky-high valuations, the Net business still holds enormous promise and will rain wealth upon long-term investors. This, of course, isn't anything new from a leading industry figure, but traders took the upbeat forecast as a validation of their commitment to driving Internet shares through the roof.
For its part, Yahoo (YHOO) advanced $10.06 to $333 after announcing a tie-up with Gateway to offer co-branded, personalized Web pages to computer buyers. Gateway (GTW) was $1.44 higher at $79.94.
America Online (AOL) rose $3.25 to $170.75 as it inked a five-year pact with Bank One's First USA unit to market credit cards online. The deal, which potentially adds as much as $500 million to AOL's pockets, will make First USA the exclusive card purveyor to the service's 15 million-plus members. First USA is already the largest provider of Visa and Mastercards in the United States.
In telecom, MCI WorldCom (WCOM) gained 6 cents to $79 as it unveiled an accord with Bell Atlantic to provide local phone service to residential customers in New York. Separately, MCI said it's planning to get back into the Internet-services business, and will detail its ambitions sometime next week. MCI Communications was forced by regulators to discard its online resources last year as a precondition for its merger with WorldCom.
Qwest Communications International (QWST) climbed $2.50 to $62.63 after posting fourth-quarter profit of 3 cents a share, excluding one-time charges. This beat analysts' expectations by a penny, and was accompanied by a threefold hike in revenues. At the same time, Qwest said it had landed a $1 billion job upgrading the US Treasury Department's communications system -- its largest-ever commercial contract.
The Street digs a good belt-tightening. Mobile-phone maker Qualcomm (QCOM) advanced $2.56 to $65.19 after saying it will give about 700 employees the boot and take a $20 million restructuring charge. Merrill Lynch, liking the sound of that, upgraded its near-term rating for the company's stock to "accumulate" from "neutral."
Qualcomm workers probably never saw it coming. Just last month, the company reported a 20 percent increase in quarterly revenue to $941 million -- the highest amount in its 13-year history. Nice.
