The Dow powered ahead driven by hopes for a more generous tone from the Federal Reserve at their next FOMC meeting, but the Nasdaq wavered on continued fears that a hard landing for the economy will crush tech stock earnings estimates for next year. Otherwise it was a very distracting day in the stock market as all eyes turned to the rapidly changing tide of the U.S. presidential election. The Wall Street Journal reported that the Fed could shift its economic outlook when it meets in December leading to a neutral tightening bias.
Most traders now believe the chance of further interest rate hikes is almost zilch.
However, rate cuts aren't considered likely until early in 2001. Alan Greenspan is speaking before a group of bankers tomorrow morning in what is sure to be a closely monitored event by the stock markets. Meanwhile, the dollar hit 2-month lows against the Euro. Over the past few years the Nasdaq and the strength of the dollar have been highly correlated until the most recent down turn began in September, when the dollar's price continued to rise while the Nasdaq nose dived. The divergence has currency traders worried that the dollar could weaken considerably in the coming months with deleterious effects on stock prices.