Newspaper article St Louis Post-Dispatch (MO)

Optimistic Investors Send Dow to a Record

Newspaper article St Louis Post-Dispatch (MO)

Optimistic Investors Send Dow to a Record

Article excerpt

Investor optimism following the president's budget victory as well as sharply lower interest rates pushed up stock prices Monday, sending the Dow Jones average and NASDAQ index to record highs.

The Senate's narrow passage of President Bill Clinton's deficit reduction measures on Friday lifted bond prices and pushed down yields to historic lows. After a brief morning downturn, stocks followed and never looked back.

"The strength in the stock market fed off the increases in bond prices," said James Solloway, director of research at Argus Research Corp.

Stocks have accompanied bonds in recent months because investors hope low interest rates will boost the economy and corporate profits. At the same time, low yields on interest-bearing investments make the potential returns from stocks more attractive.

Bonds, meanwhile, rallied because of the real potential for deficit reduction and because the measures do little for economic growth, Solloway said. Bond investors favor slow growth, which doesn't bring inflation. …

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