- The Washington Times - Wednesday, January 31, 2007

NEW YORK (AP) — Stocks shot higher yesterday after the Federal Reserve answered two of Wall Street’s major concerns, indicating that the economy remains healthy and that inflation pressures are easing. The Dow Jones Industrial Average climbed nearly 100 points to set another trading high, while the Russell 2000 Index had its first close above 800.

The Dow rose 98.38, or 0.79 percent, to 12,621.69. The Dow came with a few decimal points of a week-old closing high and set a new trading high of 12,657.02.

The Standard & Poor’s 500 index rose 9.42, or 0.66 percent, to 1,438.24 and the Nasdaq Composite Index gained 15.29, or 0.62 percent, to finish at 2,463.93.

The Russell 2000 Index of smaller companies above the 800 mark to a record close; it finished up 2.37, or 0.30 percent, at 800.34.

For the first month of the year, the Dow rose 1.27 percent, while the S&P; gained 1.41 percent and the tech-dominated Nasdaq added 2.01 percent. Some on Wall Street are fond of noting that as the S&P; 500 goes in January, so goes the year. The so-called January barometer has had only five major errors since 1950, for an accuracy rate of 91.1 percent, according to the Stock Trader’s Almanac.

Bond prices rose sharply after the Fed’s statement, with the yield on the benchmark 10-year Treasury note falling to 4.82 percent from 4.88 percent late Tuesday.

Light, sweet crude settled up $1.17 at $58.14 per barrel on the New York Mercantile Exchange.

“We knew the economy was producing better numbers over the past couple of months but they also acknowledged the improved outlook on inflation,” Mr. Miller said. “I think the description does characterize a soft-landing scenario, which appears to be unfolding.”

The Commerce Department also said spending on construction projects fell 0.4 percent in December after rising 0.01 percent in November.

In other economic news, the cost of hiring and retaining workers moderated in the fourth quarter, possibly easing some concern about wage inflation. Wages and benefits rose 0.8 percent in the fourth quarter, down from a 1 percent increase in the third quarter, the Labor Department reported.

A weaker report came from the National Association of Purchasing Management-Chicago index of business conditions in the Midwest; it fell to 48.8 in January from 51.6 in December. A reading below 50 generally signals a pullback in the region’s manufacturing, and this was the first time the reading had fallen below 50 since April 2003. The Chicago number is often viewed as an indicator of how the nation’s overall manufacturing sector might be holding up.

Boeing rose $3.56, or 4.1 percent, to $89.56, giving a boost to the Dow. The aerospace giant’s fourth-quarter profit more than doubled amid broad strength in its commercial airplane and defense system businesses. Revenue climbed 26 percent to $17.5 billion, ahead of estimates.

SanDisk Corp., which makes flash memory products, fell $2.65 , or 6.2 percent, to $40.18 after it posted a fourth-quarter loss amid big charges related to its acquisition of Israeli flash memory maker M-Systems.

Home builders rose after the Fed’s comments on the housing market. Toll Brothers Inc. rose $1.40, or 4.3 percent, to $33.83, while KB Home jumped $2.55, or 4.9 percent to $54.22.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange.

Overseas, Japan’s Nikkei stock average closed down 0.61 percent. Britain’s FTSE 100 closed down 0.62 percent, Germany’s DAX finished up 0.01 percent and France’s CAC-40 was down 0.66 percent.

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