Newspaper article THE JOURNAL RECORD

Fed Interest Rate Cut Helps Stocks Rebound from Drops

Newspaper article THE JOURNAL RECORD

Fed Interest Rate Cut Helps Stocks Rebound from Drops

Article excerpt

NEW YORK (AP) _ Stock prices rebounded Thursday after two big declines as the government moved to lower short-term interest rates, but traders remained pessimistic about the market's condition.

The Dow Jones average of 30 industrials, down 94 points in the two previous sessions, recovered 43.61 points to finish at 3,224.96.

Advancing issues outnumbered declining ones by about 2.5 to 1 on the New York Stock Exchange. Trading was heavy with Big Board volume at 231.35 million shares as of 4 p.m., down from 249.22 million Wednesday.

The rally spanned big- and small-company stocks, helping counter losses in the last two sessions on fears about the collapsing Tokyo stock market, off more than 10 percent this week.

U.S. market participants fear that Japanese institutional investors, particularly banks, will begin selling U.S. stocks to cover losses at home.

The move by the Federal Reserve to lower interest rates was seen as an effort to prevent the troubles in Japan from derailing a recovery in the U.S. economy.

But Michael Metz, chief investment strategist at Oppenheimer & Co., said the Fed's move would not prevent Japan's problems from spilling over.

"The problem is the Japanese economy, not ours, and its effect in the United States,"

he said.

The Fed added reserves to the banking system, pushing down the rate at which banks lend each other money overnight, an important figure, to 3.75 percent from 4 percent.

But traders said the market remained generally pessimistic. They said the Fed's move could be overtaken by rising interest rates during the Treasury's quarterly refunding auction later this month.

"The longer-term trend is still down," said Brad Weekes, a managing director for equity trading at Donaldson, Lufkin & Jenrette Inc.

Also, Weekes said computer-driven program orders to buy large baskets of stocks dominated the market. Institutional investors, whose movements in large portfolios can set the market trend, were not as visible.

The market was helped by a surge in London stock prices on speculation of a re-election victory by Prime Minister John Major's Conservative Party. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.