44 MILLION SHARES TRADED!!
Dow Ends Up 2.21 at 11,036.34
By EILEEN GLANTON
AP Business Writer
NEW YORK (AP) -- A barrage of conflicting signals on interest rates kept investors off
balance Wednesday, leaving the Dow industrials little changed while most stocks ended with
modest losses.
The Dow Jones industrial average ended with a gain of 2.21, closing at 11,036.34. During
the session, the Dow rose 83 points and tumbled nearly 67 points from Tuesday's close.
Broader stock indicators were lower. The Standard & Poor's 500 fell 6.30 to 1,344.15,
and the Nasdaq composite index fell 28.52 to 2,808.74.
The fear of higher interest rates, which has rattled stock and bond markets all summer, dominated trading again Wednesday.
Stocks initially tumbled after the Bank of England increased its base lending rate for the first time in more than a year, a surprise
move that followed a string of seven cuts.
But the market rebounded as Federal Reserve Chairman Alan Greenspan delivered a speech to the Gerald R. Ford Foundation
in Grand Rapids, Mich. While Greenspan discussed a wide range of topics, from the benefits of free market economies to the
need for fairness in business, he did not address U.S. interest rates or inflation.
Instead, Greenspan praised the technological advances that have contributed to ''the greatest prosperity the world has ever
experienced.''
Greenspan's words heartened investors who eagerly parsed his words, seeking signs of the Fed's future course on interest
rates. The Fed has suggested it might be willing to raise rates for a third time this year if it determines inflation is accelerating.
''Everyone is trying to guess what the Fed might be thinking,'' said Tim O'Neill, chief economist for the Bank of Montreal and
Harris Bank.
But in a separate appearance Wednesday afternoon, Fed Gov. Laurence Meyer ended the burst of optimism. Meyer said he is
unsure whether the U.S. economy is overheating, although he noted that wage pressures are building and said the case for a
third rate increase is uncertain.
O'Neill said the threat of higher interest rates, which can cut into corporate profits and increase the cost of borrowing, continues
to keep investors on edge.
''The markets are responding to data events to a greater degree than they did in the past,'' O'Neill said, adding that while
Britain's rate increase may have temporarily stunned the markets, it is unlikely to affect the Fed's strategy.
The market's midday boost was helped along by Abby Joseph Cohen, the bullish chief market strategist at Goldman Sachs &
Co. In a report to clients, Cohen said strong corporate earnings should help S&P 500 top 1,385 by the end of the year. She
also expects the Dow to top 11,500.
Cohen noted, however, that escalating labor costs could threaten corporate profits.
Certain technology companies posted major gains today. Global Crossing, the architect of an undersea fiber network, shot up 5
5/16 to 25 5/8 after the company secured a major investment from Microsoft (Nasdaq:MSFT - news) and Softbank.
Frontier Corp. (NYSE:FRO - news), a long-distance provider that Global Crossing plans to acquire, rose 9 5/16 to 45 5/8.
Chevron (NYSE:CHV - news), up 1 1/4 to 94 7/16, and Exxon (NYSE:XON - news), up 1 11/16 to 81 3/16, helped the Dow
contain its losses as oil companies continued to benefit from rising prices.
But investors moved away from consumer companies like Kodak, down 1 1/2 at 72 9/16, and Johnson & Johnson, down 1 5/16
at 100 1/2.
Declining issues outnumbered advancers by a 3-to-2 margin on the New York Stock Exchange. NYSE volume totaled 779.24
million shares, compared with 707.30 million in the previous session.
The Russell 2000 index of smaller companies fell 2.34 to 435.90.
Overseas indexes were mixed. Britain's FT-SE 100 fell 0.9 percent following news of the increase in interest rates. Japan's
Nikkei stock average fell 0.4 percent, Germany's DAX index gained 0.2 percent and France's CAC-40 closed up 0.01
percent.
More Quotes
and News:
Bank of Montreal (NYSE:BMO - news)
Chevron Corp (NYSE:CHV - news)
Eastman Kodak Co (NYSE:EK - news)
Exxon Corp (NYSE:XON - news)
Frontier Corp (NYSE:FRO - news)
Global Crossing Ltd (Nasdaq:GBLX - news)
Johnson & Johnson Inc (NYSE:JNJ - news)
Microsoft Corp (Nasdaq:MSFT - news)
Related News Categories: banking, computers, entertainment, ISDEX, leisure/travel, medical/pharmaceutical, oil/energy,
publishing, software, telecom, utilities
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