SAN FRANCISCO (03/21/2000) - The expected one-quarter of a percent hike in the interest rate today by the U.S. Federal Reserve had little immediate effect on the technology-heavy Nasdaq stock exchange.
The Fed raised the rate to 6 percent, the highest it has been in six years. One hour after the Fed's announcement, the Nasdaq stock exchange was at 4652.77, up 44.77, or .93 percent.
One analyst said many technology stocks at present are just not heavily dependent on the interest rate.
"If you look at the leaders, they are pretty much impervious (to the interest rate)," Lou Mazzuchelli, senior vice president at New York investment bank Gerard Klauer Mattison, said in a telephone interview. "Microsoft is doing well. The same is true of Intel and Cisco. People are confident in their long-term prospects."
Microsoft Corp. stock was valued at $101, up $3.7, or 3.8 percent; Cisco Systems Inc. stood at $140, up $5.75, or 4.3 percent; and Intel Corp. was at $136.6, up $1.6, or 1.2 percent.
In its statement, the Federal Open Market Committee cited inflationary concerns as the basis for today's action.
"The Committee remains concerned that increases in demand will continue to exceed the growth in potential supply, which could foster inflationary imbalances that would undermine the economy's record economic expansion," the committee said.
However, new Internet-related startups in many cases are being fueled by venture capitalists rather than by the public markets, Mazzuchelli said.
"Rising interest rates affect people with no access to capital," he explained.
"The dot com companies have access to the venture capital market. Nothing should change until it gets to the point where the people who fund venture capital markets decide to put their money somewhere else to get a better return, but we are not at that point right now."