Roundup: yesterday's markets
Proposed interest rate cut boosts shares
Federal Reserve chairman Alan Greenspan ignited the world's markets with his suggestion (subject to a vote of the Federal Open Market Committee on Tuesday) that the Fed will cut short-term interest rates next week. The Senate had been about to vote a resolution urging a rate cut, but dropped it on whispers of the Fed's move. It is extraordinary that such a move could have such an effect on markets. A small cut in the 5.5 per cent inter-bank overnight rate is unlikely to have anything like the effect on companies that the announcement had on the market. In effect, it is a psychological message: that inflation will be restrained by an economic slowdown. The result was a rise in the Dow of 257 points, to 8154, making 1998 gains positive once again. NASDAQ rose 62 to 1760. Internet stocks showed strong gains after their recent thrashing, although the whole technology sector did very well. ® Click for more stories Major gainers in percent: Adobe (5.0), Amazon.com (19), AMD (11.7), AOL (9.7), Apple (3.5), Broadcast.com (11.0), Cisco (5.4), CNET (19.6), Datastream (32), Dell (6.7), Excite (33), HP (5.9), IBM (3.4), Intel (4.2), Informix (3.8), Inktomi (11.1), Intuit (16.4), Lycos (19), Microsoft (4.1), Nat Semi (3.8), Netscape (8.3), Quantum (5.4), Qwest Seagate (4.5), Sun Yahoo (15) and VLSI (7.1). Losers included Symantec (-3.6 per cent), and Broadvision, a developer of e-commerce software, fell 25 per cent because of concerns about how it recognised revenue from a renegotiated agreement to license software to Iona Technologies. The volume of Broadview shares traded was more then eight times the average over the last three months. The Center for Financial Research and Analysis, which produces a newsletter that looks for accounting irregularities, drew attention to its findings. Broadvision had been tipped by financial analysts, and the current problem is not apparently related to the current quarter's expectations, according to Janine Kromhout of Broadview in a conference call yesterday. EBays' IPO, after earlier expectations of $14-16, was priced at $18, which was considered to be rather high, although it is the first IPO for almost a month.