Bumping along the bottom?
Equity markets surged on Tuesday - along with bond prices - after Alan Greenspan said the economy is slowing down and the Fed may be more accommodative in the near term. But earnings warnings on Wednesday and Thursday caused markets - particularly the NASDAQ composite index - to fall back down. Nevertheless, the NASDAQ didn't return to the lows reached in the prior week. Signals are growing that a bottom has been reached. Stock prices posted another spurt on Friday, ending the week on a favorable note.

Though one Florida court ruled in favor of the Bush camp, the Florida Supreme Court ruled in favor of Gore in a 4-3 vote to continue the handcounts. Equity investors do favor a Bush win, but by now, just want it to end.

Treasury yields drop on expectations of a friendly Fed
Alan Greenspan spoke, the bond market listened. Greenspan said, in a Tuesday speech to America's Community Bankers, that the economy is "in transition" to "a more sustainable balance" between the growth of demand and supply, warning that the Fed must be "alert" to the risk that weaker stock prices and greater caution among bankers and other credit providers could cause "excessive softening" in economic activity. Greenspan's remarks triggered a sharp 10 basis point drop in yields and fueled positive psychology for the rest of the week. Greenspan's admission that economic activity was weakening and hint that Fed officials may be inclined to become more accommodative set the stage for the week's party. Some pullback was only natural on Friday. Surprisingly, bond investors didn't quite know what to make of the employment report. While it did show slower payroll gains, it also revealed acceleration in wages on a year-over-year basis.