Stocks Soar on Fed Chairman's Statements
NEW YORK (Reuter) - The Dow Jones industrial average crashed through the 8,000-point ceiling Tuesday, propelled by Federal Reserve Chairman Alan Greenspan's comments that the economy was slowing and that inflation will be modest for the remainder of the year.
Shortly after 3:15 p.m. EDT, the 30-stock Dow was up 132.16 at 8,038.88, which equals its July 16 record close of 8,038.88.
In the broader market, advancing issues swamped declines 2-1 on heavy volume of 420 million shares on the New York Stock Exchange.
In his Humphrey-Hawkins testimony on the economy to Congress, Greenspan also said that the central bank must be ready to act if necessary to head off inflation, but for now economic growth seemed to be slowing.
The rally was just as explosive in bonds, where the Treasury's key 30-year bond jumped nearly a full point, which lowered its rate to 6.46 percent from Monday's close of 6.54 percent.
Greenspan said: "I have no doubt that the current stance of policy ... will need to be changed at some point. ... For the present, demand growth does appear to have moderated."
He said in his prepared text that stock market gains could fuel demand in the future.
Wall Street was happy that the Fed chief did not make any statements that hinted the Fed was planning an interest rate hike in the near future.
Solid second-quarter earnings also helped push the stock market higher.
Philip Morris Cos. posted second-quarter earnings of 76 cents a share vs. 66 cents a share in last year's second quarter and in line with the First Call consensus earnings estimate. The company's stock was up 1-12/16 to 42-5/16.
Walt Disney Co. rose 1-10/16 to 76-13/16, after reporting upbeat earnings.
But International Business Machines, whose stock had been strong ahead of its quarterly earnings release late Monday, fell 1-14/16 to 101-13/16. |
