) and Nokia (NOK
Greenspan's prepared testimony echoes the cautious optimism he expressed on Jan. 11 in San Francisco. But a remark about "activity starting to firm," appears to have cheered investors, note S&P's economists.
Inventory liquidation will need to end soon, according to the Fed chief. A spending increase will provide a brief boost "without sustained final demand," he predicts. Greenspan expects household spending to hold up, but gains are limited by rising unemployment. He also continues to be optimistic on productivity.
"What we're hearing is that there is the background for a recovery, but he's tempered those remarks," says Charles White, president of money management firm Avatar Associates. White says signs of a sustainable recovery in capital spending would make him more optimistic.
Despite on-again-off-again strength in the Nasdaq, the technology sector remains a wild card. "There are still open questions about what tech spending will be like, what PC demand will be like," White says. He cautions that gains in the Nasdaq can be easily undone by a market willing to take profits in the short-term.
Investors might face rough seas tomorrow on the heels of a bigger-than-expected loss at fiber-optics equipment maker JDS Uniphase (JDSU
). Second-quarter sales were in line with its prior guidance, but losses were deeper because of restructuring charges and deferred tax adjustments.
The fourth-quarter earnings season, which has yielded mixed results, turned out at least a few better-than-expected reports from technology companies Thursday.
Software maker Siebel Systems reported earnings per share of $0.13 vs. $0.15 for the fourth quarter on 17% lower revenues. JP Morgan and Goldman Sachs raised their estimates. Siebel sees earnings and revenues growing in 2002.
Cellphone maker Nokia posted pro forma earnings per share of 0.24 euros vs. 0.25 euros for the fourth quarter on a 5.3% revenue drop. The company noted an improvement in conditions during the current year and maintained its sales growth target.
Data storage company EMC Corp (EMC
) also beat analysts' expectations. It reported a net loss that was narrower than forecasts and added that cost-cutting was ahead of schedule.
The blue-chip Dow Jones industrial average was helped by strong fourth-quarter results from Eastman Kodak (EK
), but the company expects continued economic weakness to pressure its earnings in 2002.
In other news from Dow members, SBC Communications (SBC
) reported a fourth-quarter profit from operations that beat analysts' estimates. And McDonald's (MCD
) fourth-quarter profits were in-line with expectations and the fast food company kept its 2002 EPS projections.
The Dow rose 65.11 points, or 0.67%, to 9,796.07. The Nasdaq Composite index added 20.20 points, or 1.05%, to 1,942.58. The broader Standard & Poor's 500 index climbed 3.97 points, or 0.35%, to 1,132.15.
Treasuries on the short end of the yield curve fell in price after choking on supply Wednesday and getting a stiff jab from Greenspan's brighter tone today, says S&P MMS. The new 2-year notes are sharply underperforming and the curve is flattening. Notes on the long end, 10-year and 30-year, were flat to lower in price.
The more Greenspan speaks, the less likely a rate cut appears at next week's FOMC meeting, though it may be premature for policy-makers to abandon the easing bias. MMS expects that the rate-setting committee will hold rates unchanged next Wednesday.
On the data front, initial jobless claims fell 15,000 to 376,000 in the week ended Jan. 19 from 391,000 in the week before. The four-week moving average fell to 404,250 from 413,000 the week before. Continuing claims fell 54,000 to 3,458,000.
European markets finished in positive territory, with help from Nokia's results. In London, the Financial Times-Stock Exchange 100 index added 52.50 points, or 1.01%, to 5,233.10 on a report that British manufacturers' confidence rose in the fourth quarter. In France, the Paris CAC 40 ended up 57.26 points, or 1.29%, to 4,508.07. Germany's DAX index ended up 7.41 points, or 0.14%, to 5,170.44.
Asian markets ended mixed Thursday. Japan's Nikkei 225 index added 33.14 points, or 0.33% to 10,074.05, finally reversing several days of sharp losses. Banks slid again, but were offset by strong gains in semiconductors and auto stocks. Hong Kong's Hang Seng index fell 20.68 points, or 0.19%, to 10,741.46.