- The Washington Times - Tuesday, October 28, 2003

NEW YORK (AP) — Wall Street shot higher yesterday after the Federal Reserve’s decision to leave rates unchanged bolstered investor confidence that the economy will rebound strongly. The Dow Jones Industrial Average climbed 140 points, its best advance in a month.

The Nasdaq Composite Index notched its best gain in nearly four months, while the Standard & Poor’s 500 index had its strongest advance in a month.

The Fed’s decision was expected, but investors were pleased that policy-makers indicated rates would probably remain at current low levels for some time. The news was particularly welcome after a strong consumer confidence report earlier in the day.

“The Fed statement appeased pretty much everyone,” said Keith Keenan, vice president of institutional trading at Wall Street Access, a New York-based brokerage firm. “They hit all the right notes.”

“Equity investors wanted them to keep rates low for the foreseeable future. … And they appeased bond investors by saying inflation was not anywhere in sight,” he said.

The Dow closed up 140.15, or 1.5 percent, at 9,748.31, having gained 25.70 the previous session. It was the best one-day point gain since Oct. 1, when the blue-chip average rose 194.14 points.

The broader market also moved sharply higher. The Nasdaq gained 49.35, or 2.6 percent, to 1,932.26. It was the biggest gain since July 7, when the technology-focused index rose 57.25.

The S&P; 500 rose 15.66, or 1.5 percent, to 1,046.79. It was the best advance since Oct. 1, when the index gained 22.25.

Stocks were already trading higher before the Fed decision as the result of an upbeat economic report. The Conference Board said its Consumer Confidence Index rose to 81.1 this month from 77 in September. The business research group said consumers were encouraged by signs of a stronger job market.

Meanwhile, the Commerce Department said new orders for big-ticket goods rose by 0.8 percent in September after a 0.1 percent decline the previous month. September’s reading was slightly lower than forecasts; however, the August number was revised upward yesterday from the 1.1 percent drop initially reported.

Analysts cautioned, though, that the market’s advance would likely be limited in the weeks ahead. With the earnings season drawing to a close, Wall Street will need another catalyst to inspire strong buying.

Stocks have mostly gained since mid-March, but investors have become more hesitant in recent weeks, looking for more definitive signs of an economic recovery. Analysts say investors are looking for reasons to buy. On Monday, for example, a string of merger announcements pushed the market higher. But there are still some concerns that company earnings don’t justify the higher stock prices.

Also, some stocks had moved higher in anticipation of positive earnings news from companies.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide