Stocks Expected to Open Lower on Profit-Taking

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Stocks Expected to Open Lower on Profit-Taking

 
07.11.02 15:46


A Wall Street Journal Online News Roundup
Stocks are expected to slip at the open Thursday, as investors take profits following Wednesday's rate-cut rally.

Futures on the Standard & Poor's 500-stock index about 90 minutes before the New York Stock Exchange's open indicated that the Dow Jones Industrial Average will slide about 40 points at the opening bell.

Preliminary third-quarter nonfarm productivity figures released an hour before the market's open by the Labor Department Thursday showed a gain in productivity of 4%, compared with a gain of 1.5% in the second quarter. Economists had forecast a gain of 4.3%.

Shortly after the report, S&P futures indicated the Dow industrials will fall 70 points at the open.

Shortly after Wednesday's afternoon rate news, the Dow industrials jumped, to close up 92.74 points, or 1.07%, at 8771.01, while the Nasdaq Composite Index added 17.82, or 1.27%, to 1418.99.

The decision by the Federal Reserve policy makers under Alan Greenspan to cut their target interest rates by half a percentage point -- trumping wide expectations of a quarter-point cut -- coupled with a clear Republican electoral victory, sent stocks up even as many traders feared a round of profit-taking.

Investors concluded "that the Fed is taking a definitive action to stem any fears that things will get worse than they are," said Keith Gertsen, head of Nasdaq trading at brokerage firm Deutsche Bank Securities in New York. The Fed move, together with the election result and the resignation of the controversial chairman of the Securities and Exchange Commission, all are reinforcing the view that the current rally can continue, he said.

But not all analysts were as optimistic.

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