Key to rates in Greenspan speech

FEDERAL Reserve chairman Alan Greenspan makes his first appearance of the new year on Capitol Hill on Thursday, to discuss the state of the US economy and perhaps provide Wall Street with a hint of a rate cut.

The Fed chairman has made only one major speech on the economy in recent weeks and in it he took a more bearish view than is generally held on Wall Street.

But since that speech, more economic indicators have pointed to a stabilising economy, including the number of Americans lining up for unemployment benefits, which recently fell to its lowest weekly level in six months.

Greenspan's semi-annual testimony will begin mid-morning and investors will look at any comments that shed light on the Federal Open Market Committee interest rate meeting next week. Economists are divided as to whether the Fed will cut rates for an 11th, and possibly final, time this easing cycle.

The early signs of economic improvement in America are tenuous and weakness remains, as evidenced by the fourth-quarter earnings and forward-looking statements from major American corporations. The hi-tech sector, especially, has disappointed because most of its executives do not see dramatic improvement in the short term.

Earnings news will continue to stream forth this week, with major sectors - especially healthcare - in the spotlight. The major pharmaceuticals companies and consumer healthcare product companies begin reporting on Tuesday , with Merck and Johnson & Johnson leading the pack. The sector is expected to be one of the bright spots in an otherwise depressing profits season. Analysts are looking for a 10% to 15% rise in sector profits.

Internet darling Amazon.com is expected to post a loss of 0.7 cents a share on Tuesday, paring losses of 25 cents a year earlier but still shy of the profit that founder Jeff Bezos had hoped to record by the end of 2001.

Data supplied by Thomson Global Markets