WESTON, Fla., May 12, 2004 (PRIMEZONE) -- Another losing session on Tuesday, but with somewhat moderate losses in comparison to market results from early this week, and late last. Investors were awaiting a key earnings report from Cisco Systems, a bellwether in the technology group. The Nasdaq Composite closed down 12.52 points, or 0.41%, to 1918.83, while the Dow Jones Industrial Average dropped 48.76 points, or 0.4%, to 9,970.71. The S&P 500 was down 5.18 points, or 0.1%, to 1,090.81.
Investors' concerns over the price of crude are playing out in trading, with the major averages mired in the red once again in early trading Wednesday. Also damaging investor confidence were Commerce Department figures showing the U.S. trade deficit widened by 9.1 percent to a record $46 billion, much higher than what analysts were expecting.
Stocks in the news include Qualcomm (Nasdaq:QCOM), which raised its fiscal third quarter and 2004 earnings and revenue forecast due to greater-than-anticipated WCDMA royalties, stronger orders and faster migration to new phone chips.
Also, after unleashing its earnings after the close of trading on Tuesday, shares of Cisco Systems (Nasdaq:CSCO) are trading lower in morning dealings Wednesday. The stock was up 2.9 percent ahead of the news.
And Citigroup (NYSE:C) announced it will buy Principal Financial Group's (NYSE:PFG) residential mortgage subsidiary in a deal valued at $1.6 billion.
The latest Federal Open Market Committee meeting was held on Tuesday, May 4, 2004, where the FOMC changed its tune somewhat, saying in its statement that "The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal," the FOMC said in its statement. "Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."
In plain terms The Fed is saying that conditions have improved to the point that rates can start moving up from their current historically low levels, but will probably do so at a measured, and even pace . . . no 50 and 75 basis point hikes in the near future. The Fed also said it "continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity." Regardless, many analysts are saying the first rate increase may come as early as June.
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