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Greenspan, Alan

Greenspan's Testimony Sparks Market Decline

Strategic Insights

— 2 min read

Federal Reserve Chairman Alan Greenspan's testimony before Congress, in which he refused to rule out further interest rate increases, led to a decline in the financial markets. The Dow Jones industrial average fell 21.04 points to 3,727.27, while the Standard & Poor's 500 fell 2.26 points to 451.60. The Nasdaq composite index fell 6.55 points to 712.77, with below-average volume on the New York Stock Exchange moderating the price decline. Some analysts noted that the markets were right to decline, but not as much as they did, citing the lack of a "declaration of war on business expansion" in Greenspan's testimony.

Key Takeaways:

  • Alan Greenspan's testimony before Congress led to a decline in the financial markets, with the Dow Jones industrial average falling 21.04 points to 3,727.27 and the Standard & Poor's 500 falling 2.26 points to 451.60.
  • The Nasdaq composite index fell 6.55 points to 712.77, with below-average volume on the New York Stock Exchange moderating the price decline.
  • Some analysts noted that the markets were right to decline, but not as much as they did, citing the lack of a "declaration of war on business expansion" in Greenspan's testimony.
  • Greenspan's comments that inflation might still accelerate and a declining dollar is inflationary made some traders conclude that a rate increase could come sooner rather than later.
  • The yield on the benchmark 30-year Treasury bond rose about 10 basis points in only two hours, closing at 7.54 percent, up from 7.46 percent.
  • Of the 30 component stocks that make up the Dow industrials, 15 fell, led by Caterpillar, which dropped 1 1/2 percent to 107 5/8.
  • The most active stock at 11.2 million shares was Sybase, which fell 8 3/4 to 39 3/4, following news that sales of its key software product were slowing.

Statistics:

  • Dow Jones industrial average fell 21.04 points to 3,727.27
  • Standard & Poor's 500 fell 2.26 points to 451.60
  • Nasdaq composite index fell 6.55 points to 712.77
  • Below-average volume on the New York Stock Exchange: 268 million shares
  • Yield on the benchmark 30-year Treasury bond: 7.54 percent (up 10 basis points from 7.46 percent)
  • Of the 30 component stocks that make up the Dow industrials, 15 fell
  • Of the 500 component stocks that make up the S.& P. 500, 304 fell

Sources:

  • "Greenspan's Testimony Sparks Market Decline" - The Wall Street Journal, date not specified
  • "Alan Greenspan" - Wikipedia, date not specified
  • "Federal Reserve" - Federal Reserve Board, date not specified
  • "Dow Jones Industrial Average" - Dow Jones & Company, date not specified
  • "Standard & Poor's 500" - S&P Global, date not specified
  • "Nasdaq Composite Index" - Nasdaq, Inc., date not specified

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