Stocks Claw Back as Fed Report Waxes Optimistic
Stocks swung wildly on Wednesday, but major indexes closed higher as bargain hunters jumped in after the latest upbeat assessment of the economy.
The Dow Jones industrial average gained 69.30 points, or 0.6%, to 10,955.41, after falling as much as 111 points during the session.
The Nasdaq composite had an even more dramatic turnaround: It closed up 2% at 2,534.44 after being down as much as 2.2% early in the day.
Stocks had slumped Tuesday after long-term Treasury bond yields rose to their highest level since last summer amid concern that the robust U.S. economy will eventually prompt the Federal Reserve to raise interest rates.
But on Wednesday, the Fed’s own “beige book” report on the economy said that while the expansion continued in March and April, prices and wages held steady--suggesting there are few inflationary pressures.
That took the pressure off bond yields, which closed flat or slightly lower. The 30-year T-bond ended at 5.7%, down from 5.71% on Tuesday.
The Fed report “came in exactly what we were hoping for,” said Bryan Piskorowski, a market analyst at Prudential Securities. “It showed moderate growth with no wage pressure.”
Rising stocks narrowly outnumbered losers on the New York Stock Exchange.
Also helping sentiment Wednesday: AT&T;’s victory in its bid for MediaOne Group, and General Electric Chairman Jack Welch’s comments to analysts that GE’s earnings growth this year will “at least” meet expectations of 14%.
GE, a Dow stock, surged $4.06 to $109. AT&T;, also a Dow stock, gained $5.38 to $56.94.
In other markets on Wednesday, the dollar tumbled against the euro and its member currencies on hopes for a peace agreement in Kosovo and speculation that the European Central Bank is ready to buy its limp currency to shore it up.
The euro gained about 1.1% against the dollar, closing at $1.074.
In commodity markets, oil inched up to just under $19 a barrel. And gold gained to a two-month high.
Among Wednesday’s highlights:
* Cable and telecom leaders all advanced, with MCI WorldCom up $6.69 to $89.63, Time Warner up $4.19 to $71.25, @Home up $19.25 to $154.94 and Cablevision up $2.50 to $80.94.
But networker Newbridge Networks plunged $7.94 to $28.88 after warning that earnings for the quarter just ended will be below expectations.
* Tech stocks helping Nasdaq rebound included Intel, up $2.38 to $64; Microsoft, up $1.06 to $79.13; and many Internet shares, which rallied after several declining sessions.
EBay rose $5.56 to $186.81, Amazon.com edged up $3.50 to $146.50 and America Online added $2.63 to $129.75.
Among software issues, Autodesk slid $4.94 to $23.56 on downbeat earnings news.
* Major industrial stocks were mixed. Illinois Tool Works rose $1 to $76.94, Dow Chemical surged $2.13 to $135, Hercules gained $2 to $39.56 and Bowater soared $2.63 to $55.75. But Ingersoll-Rand was off $2.31 at $69.13.
* Online brokerage stocks were higher despite Securities and Exchange Commission Chairman Arthur Levitt’s attack Tuesday on some of the firms’ ad campaigns.
E-Trade jumped $9 to $112, Ameritrade gained $6.94 to $120 and Charles Schwab rose $5.75 to $107.50.
Among major brokerages, Goldman Sachs eased $1.25 to $69.13 on its second day of trading.
* Some drug shares rebounded. Pfizer jumped $4.38 to $118.31 and Merck added $1.94 to $72.81.
Market Roundup, C9
