- The Washington Times - Tuesday, June 7, 2005

NEW YORK (AP) — Wall Street gave up a substantial early gain and closed mixed yesterday after a Federal Reserve official warned that interest rates might continue to climb.

The Dow Jones Industrial Average had surged more than 111 points before Federal Reserve Bank of Atlanta President Jack Guynn said in a speech that the Fed’s Open Market Committee was not yet ready to stop its policy of modest rate increases. Mr. Guynn’s comments prompted profit-taking that left the Dow with a minimal gain and the Standard & Poor’s 500 and Nasdaq Composite Index with slight losses.

It was an earlier, bullish assessment of the economy from Fed Chairman Alan Greenspan, given in a speech broadcast at a meeting of central bankers in Beijing late Monday, that triggered the initial advance. Mr. Greenspan said the economy would remain strong and intimated that the Fed could soon stop raising interest rates, at least for the short term.

With seemingly dueling comments from the Fed committee members, investors remained confused about whether the economy was headed for a harsh slowdown and if the Fed would continue raising interest rates through the summer.

“The cross currents here are nothing like I’ve ever seen,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “There’s a lot of confusion and uncertainty over everything — the dollar, interest rates, oil, all sorts of things.”

The Dow rose 16.04, or 0.15 percent, to 10,483.07.

The Nasdaq, which had been up more than 1 percent, lost 8.60, or 0.41 percent, to 2,067.16, while the S&P; 500 fell 0.25, or 0.02 percent, to 1,197.26.

The bond market moved higher as the stock market began to sell off. The yield on the 10-year Treasury note fell to 3.90 percent from 3.95 percent late Monday. The dollar rose against the euro but fell against the Japanese yen, while gold prices moved higher.

Oil prices slid for a second straight session, with a barrel of light crude quoted at $53.76, down 73 cents, on the New York Mercantile Exchange.

Despite the lower oil prices and Mr. Greenspan’s remarks, analysts said there wasn’t enough fundamental strength — or trading volume — to support the early gain even before Mr. Guynn’s remarks.

“We had a nice rally this morning off of Greenspan’s comments, but we were really just up on fluff,” said Todd Leone, managing director of equity trading at SG Cowen Securities. “There’s not a lot of money flowing into the market, and when we hit the top of our range, we just bounced off it.”

General Motors Corp. helped the Dow hold on to at least part of the session’s gains. The struggling automaker said it will cut 25,000 jobs by 2008 as it attempts to rein in spending. Chief Executive Officer Rick Wagoner said the company expects to close additional assembly and component plants as well. GM gained 31 cents to $30.73.

Wall Street firm Morgan Stanley edged 3 cents higher to $49.14 even though another top employee left the company. Managing Director David Topper, a 22-year veteran, resigned to work for JPMorgan Chase & Co. as co-head of its U.S. equity capital markets position, according to the New York Times. JPMorgan Chase slid 3 cents to $35.48.

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