GREENSPAN TESTIMONY PUSHES DOLLAR AND BOND YIELDS LOWER BUT BOOSTS STOCKS AND GOLD -- FINANCIALS AND MATERIALS LEAD MARKET REBOUND

DOLLAR DROPS WITH BOND YIELDS... Mr. Greenspan's testimony before Congress which talked about the benefits of a weaker dollar pushed the U.S. dollar sharply lower today. As has been the case lately, bond yields fell along with the dollar (Chart 1). The drop in bond yields (or a jump in bond prices) is giving a boost to stocks. Two of the strongest stock groups are financials and materials. The Financials Select Sector SPDR is hitting a new 52-week high today (Chart 2). A brokerage upgrade is pushing brokerage stocks higher today led by Goldman Sachs and Morgan Stanley Dean Witter (Chart 3). The weaker dollar is pushing commodity prices higher along with their related stocks. Phelps Dodge and Alcoa are leading strong gains in the material sector. The weaker dollar is boosting gold by $4 to $411. That's giving a boost to gold stocks. Chart 4 shows the AMEX Gold Bugs Index climbing back over its 50-day average and its late January peak. MORE AFTER THE CLOSE.

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