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Thursday, Sep. 24, 1998
Greenspan speaks, Dow soars 257 points
Official strongly hints that Fed will cut interest rates next week
By BRUCE MEYERSON
Associated PressNEW YORK -- Stocks shot higher Wednesday, adding 257 points to the Dow, as Federal Reserve chairman Alan Greenspan gave the clearest signal yet that he'll fight the global economic crisis with lower interest rates.
The Dow Jones industrial average rose 3.3 percent to 8,154.41, its highest finish in a month, with more than half of the 257.21-point rally coming during the final hour of trading.
The gain, the fifth-biggest in points for a single day, lifted the Dow more than 200 points above this year's starting point of 7,908.25 but still left the blue-chip barometer nearly 1,200 below the July 17 record of 9,337.97.
Broader stock indexes also surged as Greenspan told a Senate panel that Federal Reserve officials understand the need to act quickly in containing the global crisis, fueling hopes for an interest rate cut at next week's Fed meeting.
Greenspan, who last week dashed hopes for a multinational rate cut in his remarks to a House committee, said he could not answer a question on the Fed's specific plans because the central bank's policy-makers have not yet met.
But the usually cryptic Federal Reserve chief also stressed that ``I think we know where we have to go'' in dealing with the crisis, which began 14 months ago in Asia, recently engulfed Russia, and is now threatening Latin America.
``For someone who always plays cards so close to his vest, he pretty much laid them down on the table with today's testimony,'' said David Rosenberg, senior economist at Nesbitt Burns Securities of Chicago. ``I don't think he could have been much clearer with his intentions. Up until today, the question was when and not if the Fed will cut rates, and now the debate is by how much.''
In addition to sparking new borrowing and spending at home, a cut in U.S. lending rates could help bolster global confidence by showing that the United States will continue to serve as an economic engine for the rest of the world.
Lower U.S. rates might also ease the flow of capital away from foreign markets by making returns on dollar-denominated investments less appealing.
Financial stocks, which have been beaten down repeatedly over their considerable loan exposure in developing nations, led the rally. Among the Dow 30, J.P. Morgan rose 4 to 92 and Travelers Group rose 3 to 43.
But the sigh of relief was hardly confined to one group Wednesday, with the Dow also drawing a boost from popular names such as IBM, up 4 to 132, General Electric, up 4 to 84, and United Technologies, up 4 to 80.
The Standard & Poor's 500 rose 36.46 to 1,066.09, and the technology-heavy Nasdaq composite index rose 62.47 to 1,760.27.
Advancing issues outnumbered decliners by a 3-to-1 margin on the New York Stock Exchange.
The NYSE composite index rose 16.35 to 526.95, and the American Stock Exchange composite index rose 12.63 to 646.08.
The Russell 2000 index of smaller companies rose 7.76 to 376.00.
Overseas, Frankfurt's DAX index rose 2.7 percent, London's FT-SE 100 rose 2.2 percent, and the CAC-40 in Paris rose 2.3 percent. Japanese markets were closed for a holiday.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web