Stocks Push Higher
NEW YORK (AP) _ Stocks pushed higher today after Federal Reserve Chairman Alan Greenspan indicated that only a modest interest rate hike may be in order to keep inflation well-tamed.
At 3 p.m. on Wall Street, the Dow Jones industrial average was up 45.60 at 10,830.55, a day after soaring nearly 190 points as inflation fears eased.
Broader stock indexes were mostly higher. Shrugging off early disappointing news from Compaq Computer and profit-taking, the Nasdaq composite index rose 21.71 to 2,539.54. On Wednesday, the index rose 103.16 _ its largest one-day point gain.
The Standard & Poor’s 500 index rose 8.92 today to 1,339.33.
Greenspan told Congress that while inflation remains in check, the Fed should consider taking pre-emptive action to avert any threat to continued economic growth.
In his most direct comments recently on the question of an interest rate hike, the Fed chairman said a modest increase could eliminate the need for more drastic action at a later date.
The Fed has warned recently it might raise interest rates as early as its June 29-30 meeting to guard against a surge in inflation. The annual rate of inflation felt by consumers so far this year is 2.6 percent, compared to a 1.6 percent rise for all of 1998.
Financial markets moved higher today in a continuing response to Wednesday’s Labor Department report that inflation at the retail level barely budged in May, and on sheer relief that Greenspan had showed the Fed’s hand so clearly.
``The markets were relieved that the Fed is finally going to do something, but it won’t be too drastic,″ said Eugene G. Mintz, financial markets analyst at Brown Brothers Harriman & Co.
Greenspan also didn’t issue any dire warnings about the stock market, as he has done in the past, added Mintz. In his testimony, Greenspan said that while it is unclear if the stock market’s current high prices represent a speculative ``bubble,″ the bursting of such a bubble needn’t have catastrophic consequences for the economy.
Other economic news today showed the country’s economic growth continues. The Labor Department reported that the number of Americans filing new claims for unemployment benefits fell by 28,000 last week to 297,000.
The nation’s trade deficit, meanwhile, held steady at a record high of $18.9 billion in April, matching the March figure.
Compaq initially fell, affecting other technology stocks, after the computer maker predicted it would lose up to 15 cents a share in the second quarter, compared to a profit of 20 cents expected by Wall Street analysts. The company also announced a restructuring. Compaq was up 1/4 at 22 1/2.
Other technology stocks shrugged off Compaq’s news, and most moved higher. Intel fell 1 15/16 to 57 3/4, while Amazon.com rose 13/16 to 112 1/2 and Yahoo! rose 1 3/8 to 143.
Advancing issues outnumbered decliners by a 5-to-4 margin on the New York Stock Exchange, where volume came to 552.02 million shares, down from Wednesday’s pace.
The NYSE composite index was up 3.49 at 635.66, and the American Stock Exchange composite index was up 1.76 at 766.68.