There is little doubt who the big winner was this week on Wall Street: Alan Greenspan. The chairman of the Federal Reserve spoke to Congress Wednesday and triggered three days of freefall on all the markets. Greenspan’s main message is the economy is growing too fast for its own good and there is “excessive optimism” on the Street (and you don’t want that). Greenspan’s words are getting so powerful, it almost seems a good investment strategy may be to sell the day before he is scheduled to testify, then buy back a few days later.
After the Greenspan-induced fall, there were many cold stocks, most notably in the fast-food arena. It started with the Wall Street Journal reporting McDonald’s is contemplating cutting the price of its Big Mac to 55 cents. Traders saw this as not only bad news for McDonald’s, but also for its competitors like Wendy’s and Grand Metropolitan PLC, parent company of Burger King. When the smoke had cleared Friday, McDonald’s had dropped from its week’s high of $47.37-1/2 to $43.25, Wendy’s had lost about $2 (closing at $20.75 Friday, up 12-1/2 cents) and Burger King was down about $1.50 (ending the week at $30.12-1/2, down 37-1/2 cents).