Stock Prices Dip over Uncertainty on Interest Rates
NEW YORK (AP) _ Stock prices eased on Wednesday amid uncertainty about interest rates, but the losses were kept minimal as investment managers added high-performing equities to their portfolios before the end of the quarter.
The Dow Jones industrial average edged down 3.46 to close at 4,547.10, after trading within a narrow 17-point band throughout the day. Over the past two sessions, the blue chip average has lost 6.58 points, barely making a dent in the 42-point rise to a record high of 4,553.68 on Monday.
Advancing issues were nearly neck-and-neck with decliners on the New York Stock Exchange. Big-Board volume was heavy at 398.21 million shares as of 4 p.m., up from 381.25 million on Tuesday.
Investors responded to a Tuesday evening speech by Federal Reserve Chairman Alan Greenspan, who said that the nation's economic growth is slowing and that the economy may be slipping into recession. Greenspan stopped short of saying he would cut interest rates, which is what many stock and bond investors hope he will do.
The bond market took Greenspan's comments as a clue that the economy is slowing enough that interest rates will come down naturally, whether the Fed eases or not. Greenspan also said he believed underlying inflationary pressures were easing, which helped buoy the price of U.S. Treasury bonds.
The 30-year Treasury bond was up 21-32 point near the end of the session, pushing its yield, which falls when prices rise, to 6.53 percent from 6.58 on Tuesday.
Meanwhile, the Fed released its "Beige Book" of economic assessment at noon, confirming that the economy is softening and heightening stock investors' fears that corporate earnings may suffer from the downturn.
The stock market was subjected to a number of cross currents.
On the one hand, said Rao Chalasani, chief investment strategist at Kemper Securities, "a cut in rates (would be) a positive thing for the stability of the economy, as well as the longer-term stock market itself, because it bodes well for earnings."
And this week, investment managers, anxious to show their clients a good mix of high-performing equities in their portfolios at the end of the quarter, continued to add to their roster of stocks. …