WESTON, Fla., July 7, 2004 (PRIMEZONE) -- A fresh round of profit warnings from a variety of key players in the technology space fueled concerns over the pace of earnings growth in the sector that has been at the forefront of the market's ascent over the past year. Specifically the software and semiconductor arena have been at the pulpit most often, with fresh warnings coming weekly. The Nasdaq Composite was up 12.28 points to 1,976 after dipping heavily in the previous session, while the Dow Jones industrial average was higher by 21.42 points, to 10,240.87.
Also back at the forefront of investor's concerns is the price of crude oil futures, which seem intent on piercing the $45 mark. OPEC helped ease the price of crude back below $42 per barrel the last time it peaked, but many analysts feel they can only do so much going forward. The price of crude oil fluctuates and rises as trouble continues in the U.S.'s efforts in Iraq. Also damaging investor confidence were Commerce Department figures showing the U.S. trade deficit recently widened by 9.1 percent to a record $46 billion, much higher than what analysts were expecting.
Stocks on the move include SAFLINK(R) Corporation (Nasdaq:SFLK), a leading developer, marketer, and integrator of biometric security solutions, and Microsoft(R) Corporation (Nasdaq:MSFT), who announced that they have formed a strategic partnership to deliver highly scalable, highly secure solutions to critical infrastructure Homeland Security programs.
Also in the news were AT&T (NYSE:T) and McLeodUSA (Nasdaq:MCLD) who announced that they have reached a long-term agreement in principle whereby AT&T would begin an orderly transition of lines off the Bells' UNE-P platform in selected states and onto McLeodUSA's UNE-L network. Finalization of the agreement requires regulatory clarity in support of facilities-based competition.
The previous 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. 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 was 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." And they held true to the market's expectations last week, at the culmination of their latest meeting. Most analysts expect rates to continue moving higher, though slowly, for the next couple of years.
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