Greenspan Expected to Cut Rates Again
Federal Reserve Chairman Alan Greenspan is widely expected to swing his interest rate ax Tuesday for the 10th time this year as he tries to shore up an economy most analysts say has tipped into recession.
Many analysts say things are looking so grim that they expect an aggressive half-percentage point cut, the third such move since Sept. 11. But some say the Fed should opt for a quarter-point reduction since its previous nine cuts have yet to fully affect the economy.
The Fed’s decision is expected at approximately 11:15 a.m. Tuesday.
The rate cut, combined with falling oil prices, likely tax cuts and the Treasury’s decision to stop selling 30-year bonds might all conspire to give a boost to stocks this week, at least in the short term.
Wall Street pros warn, however, that more major terror attacks on the United States could rattle consumer confidence. And they say fears about higher unemployment, the slumping economy and dismal corporate profits make it likely the bounce will not extend much past next week.
“We’ll surely get another interest-rate cut and the fact that oil is below $20 a barrel is positive, but it’s not enough to get euphoric about,” said Cummins Catherwood, who oversees $800 million for Rutherford Brown & Catherwood.
Closely watched corporate quarterly profit reports from market leaders, such as Cisco Systems Inc., and data on consumer confidence and producer prices will keep investors on their toes in coming days. If they bring bad news, stocks could quickly cool.
*
Economic data due this week :
* Today, the National Assn. of Purchasing Management issues its October non-manufacturing survey, covering businesses that account for more than four-fifths of the economy.
* Tuesday, the Labor Department reports on workers’ productivity during the third quarter.
* Wednesday, the Commerce Department is scheduled to report on wholesale inventories for September.
* Wednesday, the Fed will report on consumer credit changes during September.
* Thursday, the Labor Department will report on prices for imported goods for October.
* Friday, the University of Michigan will issue its preliminary index of consumer sentiment for November. It stood at 82.7 in October.
* Friday, Labor Department releases its producer price index for October.
