Greenspan lights a rocket under Dow
Traders appeared to be reacting in particular to Tuesday's remarks by Alan Greenspan, chairman of the Fed, in which he hinted that interest rates may be allowed to stabilise amid growing signs that last year's rapid economic growth may be subsiding.
Fearful that surging growth, falling unemployment and low inventories would trigger new inflationary pressures, the Fed raised interest rates seven times in the past year, doubling short-term rates. Mr Greenspan's remarks suggested, however, that the Fed may have succeeded in curbing inflationary impulses as well as slowing growth and preparing the economy for the holy grail of a soft landing.
Mr Greenspan said he expected growth this year of between 2 and 3 per cent, down from 4 per cent in 1994.
The blue-chip index penetrated the psychologically important 4,000 level after less than an hour of trading yesterday and by late morning was up by more than 40 points on the day. The bond market was also higher, with the US 30-year bond up than half-a-point early on.
Some analysts expressed confidence that the rally should be sustainable, with the Dow perhaps staying above 4,000 for some time. "As long as the economy doesn't show signs of uncalled for strength, we're okay," said John Manley, managing director of Smith Barney. "Mr Greenspan has done a very good job. This is the perfect environment for stocks."
Joe Battipaglia, of investment bankers Gruntal Co. similarly predicted that the upward trend on the Dow would continue. "I suspect this is starting something bigger," he said.
The prospect of steady, or eventually even falling US rates, had a less favourable effect on the dollar yesterday, which sank against both the yen and sterling.
- 1 Russell Brand accuses FOX News anchor Sean Hannity of terrorism after aggressive Israel-Gaza debate
- 2 Pope Francis issues top 10 tips for happiness
- 3 Disney heiress Abigail disowns her share of family profits in West Bank company
- 4 The secret report that helps Israel hide facts
- 5 Now diplomacy has failed, boycotting Israel might be the only way we can protect the people of Gaza
Russell Brand accuses FOX News anchor Sean Hannity of terrorism after aggressive Israel-Gaza debate
Pope Francis issues top 10 tips for happiness
Justin Bieber posts Instagram photo of Orlando Bloom crying after Ibiza fight 'over Miranda Kerr'
Disney heiress Abigail disowns her share of family profits in West Bank company
Kelsey Grammer forgives the man who raped and murdered his sister in 1975
The secret report that helps Israel hide facts
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...
£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...
£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...
Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...