Earnings announcements sour mood
Economic news was generally friendly for equity markets this week, and even Fed officials implied that economic growth was within the horizon. Yet earnings announcements were negative and equity investors realized that corporate profits would not be improving until the second half of this year. It seems that the strong gains of November and December went overboard. Declines were broad and psychological levels, which are meaningful to investors, were breached. The Dow Jones Industrials Average fell below 10,000 once again, and the Nasdaq composite index fell below 2000.

Fedspeak and economics roil markets
In contrast to last week, an abundance of economic news and speeches by Federal Reserve officials kept Treasury players hopping. It appears that each indicator and speech was digested one at a time. By the end of the week, market players were not too far off from where they began - at least with respect to the long end of the market (10-year and 30-year). However, the 2-year and 5-year note yields were up more significantly from week ago levels. Economic news will be sparse next week and all market players will be keenly focused on Greenspan's testimony before the Senate Budget Committee on Thursday, January 24.