Newspaper article THE JOURNAL RECORD

NASDAQ Records Largest Point Gain Ever

Newspaper article THE JOURNAL RECORD

NASDAQ Records Largest Point Gain Ever

Article excerpt

NEW YORK (AP) -- Technology stocks soared Tuesday, giving the Nasdaq composite index its biggest one-day point gain ever, after the Federal Reserve left interest rates unchanged.

The Fed, delivering an early Christmas present to Wall Street, also suggested there may be no need to raise rates in the coming months. Its announcement propelled the Dow Jones Industrial Average out of a modest slump, sending the blue chips up 56.27 to close at 11,200.54.

The Nasdaq's record gain of 127.28 brought the technology- dominated index to 3,911.15 for its 56th new closing high of 1999. The Nasdaq is up 78 percent in the year to date.

The Standard & Poor's 500 rose 15.34 to 1,433.43.

Stock investors were mildly surprised by Fed's announcement after its Open Market Committee held its last meeting of 1999.

Most economists believed the Fed would set aside concerns that the economy is growing too quickly and leave short-term interest rates unchanged until some time in 2000. But many investors also expected the Fed to adopt a tightening bias, which would signal a willingness to raise rates at some point in the future.

Instead the Fed, which has raised rates three times in 1999 to keep inflation from escalating, remained neutral.

"They did not raise their bias, so the bottom line is that it's a nice surprise," said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter. "This bodes well for the economy, for corporate earnings and for the stock market."

Yet the Fed's decision came with a note of caution. Central bankers said they left interest rates and their bias unchanged in an effort to ensure a smooth transition to the Year 2000, yet they remain concerned about the torrid growth rate of the U.S. economy.

Bond prices, which are generally more sensitive to inflationary pressures, received only a fleeting boost from the Fed's announcement. …

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