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Wall St. on data watch
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May 25, 2001: 8:46 a.m. ET
Fed chairman's comments, economic reports to set market's tone
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NEW YORK (CNNfn) - A quartet of economic reports and Federal Reserve Chairman Alan Greenspan's comments that the ailing U.S. economy may need more interest-rate-cut medicine will set the tone for Friday's session on Wall Street.
Greenspan, in a speech in New York late Thursday, said that "sub-par economic growth is not yet over" in the United States and "further policy response" from the Fed may be needed – central bank speak indicating that more rate cuts could be coming.
But he also said the Fed's five aggressive cuts so far this year should help boost the world's largest economy by the end of the year.
Reaction to Greenspan's remarks was mixed. Stocks fell in Europe and Asia while futures contracts edged up, pointing to a flat to higher start on Wall Street, where trading could be light ahead of the long Memorial Day holiday weekend.
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 CNNfn's Peter Viles reports on Greenspan's speech at the NY Economic Club Thursday. |
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The mild reaction to Greenspan's comments is a long way from December 1996, when his now famous remarks about "irrational exuberance" in asset prices sparked a broad sell-off in stock markets around the world.
David Jones, chief economist with Aubrey G. Lanston, said Greenspan was trying to lift Wall Street's spirits. (283K WAV) (283K AIFF)
"He has found the right policy track. He is even with the curve with his easing moves, and he gave the market some hope that he was going to ease some more," Jones told CNNfn's Ahead of the Curve program.
The Dow Jones industrial average begins the session at 11,122.42 after a small gain Thursday while the Nasdaq composite index, weighted with technology issues, stands at 2,282.02 after rising 1.7 percent Thursday – its seventh gain in eight sessions.
Asian markets closed lower as Tokyo stocks fell for the fourth straight session, while European stocks fell as investors focused on the still-weak-United States part of Greenspan's remarks.
Treasury bonds rose in price as bond investors bet interest rates may be headed lower, sending yields, which move inversely to prices, falling. The yield on the 10-year bond dipped to 5.47 percent from 5.50 percent late Thursday. The 30-year yield slipped to 5.82 percent from 5.86.
On the economic front, the U.S. economy grew at a 1.3 percent rate in the first quarter, the government said Friday, below its initial forecast of 2 percent made a month ago and about in line with Wall Street forecasts.
Three other reports are due shortly after Wall Street opens for business. The government's April reading for durable goods orders is expected to show a 2 percent decline, compared with a 2.9 percent increase in March.
The National Association of Realtors' report on April existing home sales is forecast to show a drop in the annual rate to 5.25 million from 5.44 million the prior month. Such a dip would mirror the one for new home sales the government reported Thursday, possibly reflecting a rise in mortgage rates in recent months.
The University of Michigan's revised consumer sentiment index for May, which is leaked to news agencies by clients who pay for the report, is expected to be little changed from the preliminary reading, dipping to 92.5 from 92.6 earlier this month.
On the corporate front, Wal-Mart Stores (WMT: Research, Estimates) allegedly knew an exercise glider it sold was unsafe, causing dozens of injuries, but failed to report the incidents as required by federal law, according to a government lawsuit to be filed Friday that seeks $4.5 million in damages. Wal-Mart stock, one of the 30 Dow industrials, rose 37 cents to $52.89 Thursday. 
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