By James Langton

(February 28 – 13:15 ET) – U.S. Federal Reserve Board Chairman Alan Greenspan destroyed hopes for an inter-meeting rate cut this morning. In his testimony to the U.S. House of Representatives, Greenspan said the Fed prefers to act on its pre-announced meetings.

The statement prompted Bear Stearns economist Wayne Angell, who had started the whole inter-meeting cut rumour, to back away from his prediction. Greenspan also indicated that he’s worried about the economy, but not worried enough for some traders, indicating his belief that the U.S. will avoid recession.

In response to his comments, the markets are sliding at midday. The TSE 300 is down about 69 points to 7,996.

Volume remains rather moderate at 64.1 million shares, but the tone is decidedly negative, more than two to one in favour of sellers. Market breadth also favours losers about 11 to 7 over winners.

There is minimal action on the upside today, only real estate is acting as a safe haven, almost everything else is down. Golds are particularly weak, as are the industrials, financials, and mines.

Nortel Network is leading the way down, as many U.S. techs slide in response to Greenspan’s comments. Nortel is off about 1.4% in active trading of more than 7.4 million shares. Following Nortel down are JDS Uniphase, BCE Emergis, Open Text, Mosaid, Siebel, ATI and biotechs, QLT and NPS Allelix.

Among the financials, Bank of Montreal continues to get slammed for its weak earnings yesterday and reports of credit quality deterioration. All the other banks are down, too, today as rate cut hopes recede. The insurers aren’t providing much refuge. Only C.I. and AGF are showing much strength in the group.

There is simply no momentum on the upside, and today’s gainers are doing so on relatively light volume. That said, winners include Magna, PRI, Biovail, Bowater, Loblaws and Molson.

In New York, Greenspan’s comments threw cold water on an early rally, and stocks are heading lower at midday.

The Dow Jones industrial average is down 128 points to 10,508. The Nasdaq composite index is off 58 points to 2,149, and the S&P 500 is down 21 to 1,236.

The Nasdaq fall is being led by names in the networking sector such as Cisco Systems, Ciena, Juniper, Worldcom and JDS. Oracle is also down sharply. Sun is holding up. Nortel is leading the NYSE down, as are GE, Corning, EMC, IBM and Motorola. Financials are weak, too.

The CDNX is holding up rather well, all things considered. It is down just five points to 3,070. Volume is average at 18.4 million shares. Techs are leading the way lower, with some resistance in oils and mines. Aspire Capital Inc is up 87% to 28¢ on 3.1 million shares.