- The Washington Times - Sunday, July 2, 2006

NEW YORK (AP) — Although Wall Street appeared convinced last week that the Federal Reserve might be close to ending its string of interest rate increases, upcoming data on the economy and corporate earnings easily could give investors another bout of indigestion.

On Thursday, the Fed made its expected quarter-point increase on short-term lending rates, the 17th consecutive raise in two years. But in its accompanying statement, the central bank seemed to ease its stance on future rate increases and acknowledged that the economy was moderating.

The change in language soothed Wall Street’s concerns that the Fed might lift rates too high and topple the economy. Stocks soared, giving the Dow Jones Industrial Average its biggest one-day jump in more than three years.

Although the Fed may have moved a step closer to the end of its rate tightening, investors shouldn’t get ahead of themselves, said Michael Sheldon, chief market analyst for Spencer Clarke LLC. Rates could keep climbing if inflation shows signs of accelerating, he said.

“As the Fed has said, future rate hikes will depend on economic data over the next several weeks,” Mr. Sheldon said. “Investors do need to face the fact that the Fed might have more work to do.”

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