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Technology Stocks : Oracle Corporation (ORCL)
ORCL 201.95-1.5%Nov 28 9:30 AM EST

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To: Mo Chips who wrote (4501)12/16/1997 10:38:00 AM
From: nanu swamy  Read Replies (2) of 19080
 
>> You mean the Fed is buying stocks on the NYSE???

Hey Mo,

The price of a stock is directly related to the supply/demand
situation. If there is more money pumped into the financial
markets i.e the Fed pumps money into big financial institutions -
there is more money/fluidity in the system to trade the
"fixed" quantity of stock. So the stock price has a tendancy
to go up... (but may not due to other conditions) The Fed also
has the power to pull money away from financial institutions
and produce an opposite effect.

Another way of explaining it is - Why do you think Home Mortgage
Interest Rates are so low (6%) now?? Becoz financial institutions
have excess money and to lend it out they need to reduce interest
rates or else nobody would be interested in it..

Thanks, nanu
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