The main indices headed down in late morning trading, with the Dow Jones Industrial average off 108 points at 11,014.5, even though Mr Greenspan held out the possibility of additional interest rate cuts.The revised quarterly growth statistics were only slightly worse than most analysts had been expecting. They were, none the less, sharply lower than the 2.0 per cent GDP growth that the Government had originally estimated for the quarter. Growth in the final quarter of last year stayed at only 1.0 per cent.In a speech to the New York Economic Club, Mr Greenspan signalled that after five half-point rate cuts this year, further monetary easing may still be on the cards. "The period of sub-par economic growth is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, requiring further policy responses," he said.At the same time, however, Mr Greenspan stressed that the cuts already enacted should "be providing substantial support for a strengthening of economic activity later this year". Some on Wall Street saw this as a sign that he believes the Fed has gone far enough to loosen conditions."The bears are choosing to interpret Greenspan's remarks as that he's at the end of the line of the easing cycle," suggested John Santoro of the SG Cowen Securities. "Right now the bears have the upper hand," he said.The GDP report, issued by the US Commerce Department, highlighted companies struggling to shed inventory in the face of a continuing consumer slump. Companies cut back on their shelf and warehouse stock of products at a rate of $18.9bn a year the sharpest reduction in the US since 1983.The report also showed that corporate profits in the quarter were down 3.1 per cent after falling by 4.3 per cent in the previous quarter.
It is the first time corporate profits have been down in two successive quarters since the end of 1998. "The GDP (economic) numbers put a little concern also as to the strength of the consumer, especially on the back of lousy housing numbers we got earlier this week," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum."Since (late) March the market has taken a V-shaped stance on the hopes of a recovery but based on Greenspan's speech that is not imminent," he said. "Of all the data we got and Greenspan's speech, we should not expect a vigorous economic turnaround until 2002." Markets in New York closed earlier than usual and will remain closed all day on Monday.* Britain's economic growth in the first quarter was stronger than originally reported, expanding 0.4 per cent from the previous quarter, official data showed yesterday. National Statistics, which had estimated quarterly growth of 0.3 per cent a month ago, also revised up the year-on-year growth rate to 2.6 per cent from 2.5 per cent..
British Telecommunications is understood to be set to announce it has sold Yell, its directories business, for about £2.1bn to a venture capital consortium made up of Apax and Hicks, Muse, Tate & Furst. British Telecommunications is understood to be set to announce it has sold Yell, its directories business, for about £2.1bn to a venture capital consortium made up of Apax and Hicks, Muse, Tate & Furst. The two sides are thought to have worked on the deal through Thursday night and had hoped to announce the agreement yesterday. Last night, however, both parties were still hammering out the the terms with their lawyers. That could delay an official announcement until Tuesday.City analysts believed a deal of that size would be the biggest-ever private equity transaction in the UK.
