- The Washington Times - Wednesday, November 7, 2001

NEW YORK (AP) The 10th interest-rate cut of the year sparked a solid rally on Wall Street yesterday as investors bet that the Federal Reserve's latest attempt to stimulate growth would eventually work. The Dow Jones Industrial Average shot up 150 points, leaving it just 14 points below its close of Sept. 10, the day before the terrorist attacks.
However, the advance came primarily in the last hour of trading. Analysts say investors remain nervous about making big commitments amid increasing layoffs and worries that consumers will curb their spending.
The Dow closed up 150.09, or 1.6 percent, at 9,591.12, rebounding from the 50-point deficit that preceded the Federal Reserve's midafternoon announcement. It was also the index's fourth straight gain and best finish since the terrorist attacks. The Dow lost 1,369 points in the first week of trading after the assaults.
Broader stock indicators also advanced. The Standard & Poor's 500 Index rose 16.02, or 1.5 percent, to 1,118.86, and the Nasdaq Composite Index soared 41.43 to 1,835.08, a gain of 2.3 percent. Both indexes surpassed their preattack levels last month.
The Fed's half-point rate reduction was widely anticipated because of recent data suggesting the economy is in a recession, as well as worries that the terrorist attacks will make it even more difficult for business to turn around.
"The Fed has shown a very strong commitment to take interest rates to wherever they have to go in order to get this economy going again," said Jim Weiss, chief investment officer for equities at State Street Research.
Wall Street's initial response to the cut, though, was lukewarm. Investors appeared to be weighing the potentially positive effects that lower interest rates would have against the Fed's acknowledgment that "for the foreseeable future … the risks are weighted mainly toward conditions that may generate economic weakness."
The Dow got an additional boost from news that key Hewlett-Packard stockholders planned to vote against the proposed $20 billion takeover of Compaq Computer. Dow component HP rose $2.92 to $19.81, a 17 percent jump, while Compaq fell 49 cents, or 5.5 percent, to $8.50.
Investors also welcomed better-than-expected earnings and revenues from Cisco Systems, which reported first-quarter results late Monday. The company, however, offered few details about future quarters other than to say its fiscal second-quarter revenue would be flat to slightly higher. Still, the stock rose 57 cents to $18.47 because investors were eager for any indication that business is stabilizing.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide