Newspaper article THE JOURNAL RECORD

Stock Prices Increase on Interest Rate Hopes

Newspaper article THE JOURNAL RECORD

Stock Prices Increase on Interest Rate Hopes

Article excerpt

NEW YORK (AP) _ Hope that interest rates soon will stabilize rather than head higher propelled stock prices aloft Monday for a second straight session.

The Dow Jones industrial average closed at 3,932.34, adding 23.88 points on top of Friday's nearly 50-point surge. It was the best finish for the blue-chip indicator since Oct. 19 when it hit 3,936.04.

Other popular stock gauges also gained. The New York Stock Exchange composite index climbed 1.86 to 255.81 and Standard Poor's 500 stock index rose 3.41 to 469.38. The Nasdaq Stock Market composite rose 6.00 to 768.16 while the American Stock Exchange market value index increased 1.40 to 437.53.

Gainers beat losers by about 9 to 5 on the Big Board where trading was active despite the Martin Luther King Jr. holiday. The bond market and many banks and government offices were closed.

Volume on the NYSE floor came to 314.80 million shares as of 4 p.m. compared to 336.46 million Friday.

A change of heart by one of Wall Street's prominent bears contributed to the optimism in the market. Michael Metz, Oppenheimer Co.'s chief investment strategist, said a more favorable rate environment led him to revise his attitude toward stocks.

Based on a belief that economic growth will slow significantly, Metz said he expects stocks to advance for the next several months. He predicted that the Dow industrials will reach 4,100 sometime early this year before steadying at that higher plateau.

"We're headed for a very, very slow economy which means the Fed will be going neutral," he said. "This takes the restraining lid off the stock market for the time being."

Friday's rally was fueled by signs that the Federal Reserve Board's campaign to control inflation by subduing economic growth might be working.

An unexpectedly sluggish retail sales report combined with mild inflation readings raised hopes that the Fed won't feel the need to raise rates much more, if at all, in the near future. …

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