Newspaper article THE JOURNAL RECORD

Blue Chips Rise in Anticipation of Fed Rate Cut

Newspaper article THE JOURNAL RECORD

Blue Chips Rise in Anticipation of Fed Rate Cut

Article excerpt

NEW YORK (AP) -- Investors flocked to the safety of blue chips and shied away from the tech sector Tuesday while awaiting the Federal Reserve's anticipated interest rate cut.

Analysts said investors put off major high-tech purchases, wanting to be sure the Fed does in fact lower rates at its two-day meeting ending today. Traders fell back into a recent pattern -- bidding up safer blue chips and buying little else -- that they've followed while pondering the future health of earnings and the economy.

The Dow Jones Industrial Average finished sharply higher, up 179.01 at 10,881.20. Stocks in so-called safe haven sectors, namely consumer products, accounted for the Dow's big advance.

"It's pretty much, `Let's rally because the Fed is going to ease rates tomorrow,'" said Arthur Hogan, chief market analyst at Jefferies & Co., of the market's mood Tuesday.

The Nasdaq Composite index closed essentially unchanged, up 0.01 at 2,838.35, while the Standard & Poor's 500 index advanced 9.56 to 1,373.73.

While Wall Street expected a 0.5 percentage point reduction in interest rates, which would be the second such rate cut this month, the market also wondered how long it would take for the slumping economy and disappointing corporate earnings, particularly in the tech sector, to benefit.

Investors were also worried by news that consumer confidence slipped in January to its lowest level since December 1996. Consumers' fears about recession caused the sharp decline in confidence, according to the report by the Conference Board.

"The consumer confidence numbers were pretty shocking. The deterioration was greater than people had expected," said Ronald J. Hill, investment strategist at Brown Brothers Harriman, adding that the decline in confidence reawakened investors fears about a recession.

"What it does say is that there is a reason the economy is slowing and it has a lot to do with consumers' poor outlooks for the future," Hill said. …

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