Stock Watch

Posted: 01/2001

Stock Watch

Fed’s Tightening Bias Worries Market

The Federal Reserve’s Open Market Committee (
met the last day of our trading session (Nov. 15) and decided not to raise
interest rates–a move widely expected by Wall Street.

However, investors were hoping the Fed might change its bias, signaling that
the slowing economy has eased inflation enough to avoid rate hikes in the
future. The Fed did not cooperate.

"This is expected, though a little disappointing, as the hope was the
Fed would go to a neutral bias," said Barry Hyman, chief investment
strategist at Weatherly Securities Corp. (
"They maintained vigilance to inflation, citing oil prices and the economy
not slowing to a level that could offset inflation. As expected, it leaves it
open to a short-term consolidation in the market, but leaves the Fed meeting in
December that much more important as our first serious peek into the Fed’s
thinking going into 2001."

The Dow Jones Industrial Average added 468.80 points, or 4.58 percent, and
ended at 10707.60. In contrast, the PHONE+ Stock Index shed 164.13 points, or
4.25 percent, and ended at 3695.37. Declining issues outpaced advancing issues
77 to 50.

Western Wireless Corp. (
stormed ahead after announcing third quarter earnings. Net income was $4.5
million, or $0.06 per share.

Shares of Level 3 Communications Inc. (
were axed after the company’s name was taken off the Gilder Technology Report’s
( list of those
companies expected to benefit from the Internet’s growth. George Gilder,
president of Gilder Technology Group Inc., said that prices for services for
Level 3 and others could fall. Level 3 lost 22.75 points, or 38.97 percent, to
close at $35.63. Level 3 was our top dollar loser.

Teligent Inc. ( tanked
during the trading period. It dropped 3.41 points, or 42.41 percent, and ended
at $4.63. Although the company announced a narrower loss in the third quarter
than expected, the company said it will cut its workforce by 22 percent.
Teligent also lowered revenue projections for next year. Several analysts also
cut their ratings of Teligent.

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Chart: Service Provider Index

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