- The Washington Times - Tuesday, June 15, 2004

NEW YORK (AP) — Investors got some reassurance about inflation and the economy from Federal Reserve Chairman Alan Greenspan yesterday, and sent stocks higher as the market’s interest rates worries ebbed.

Testifying before Congress at his reconfirmation hearing, Mr. Greenspan said that, in the short term, inflation was not a major concern, though he reiterated that the Fed would be aggressive if need be.

His comments came shortly after the Labor Department released its latest Consumer Price Index. While the CPI reading was higher than expected, investors were cheered that the “core” CPI — without energy and food prices — was in line with expectations, showing that economic growth, and accompanying inflation, may be manageable.

The Dow Jones Industrial Average rose 45.70, or 0.4 percent, to 10,380.43. It had been more than 90 points higher earlier in the session before profit-taking ate into the gains late in the day.

Broader stock indicators also had healthy gains. The Standard & Poor’s 500 Index climbed 6.72, or 0.6 percent, to 1,132.01, and the Nasdaq Composite Index was up 25.61, or 1.3 percent, at 1,995.60.

It remained unclear whether the Fed would raise the nation’s benchmark interest rate by a quarter percentage point or a half point when it meets June 29.

Mr. Greenspan gave no clues as to the Fed’s thinking before the Senate Banking, Housing and Urban Affairs Committee, which was holding a hearing on his renomination as Fed chairman.

Wall Street, however, was beginning to think that a half-point rate increase might be too much, and could hurt the market’s chances for a strong rally.

“I don’t think this warrants a half point,” said Brian Belski, market strategist at Piper Jaffray. “I think we see a quarter point in June and then a nice rally through the summer until we start getting some noise from the election.”

Lehman Brothers Inc. slumped $3.07 to $73.02 despite announcing a 23 percent rise in second-quarter profits. The investment bank beat Wall Street estimates by 10 cents per share.

The merger of J.P. Morgan Chase & Co. and Bank One Corp. was approved by the Fed late Monday, clearing a major regulatory hurdle. The companies will officially merge July 1. J.P. Morgan Chase rose 9 cents to $37.25, while Bank One climbed 21 cents to $49.09.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide