NEW YORK MARKET; At last some good news

US stocks have just ended their best week since early February, as traders said Kenneth Starr's report on President Clinton contained no surprises.

"The market is saying, `whatever is in that report, it's not as bad as what could've been,' " said Dan Mathisson, head trader at DE Shaw Securities. "It looks as though Clinton's chances of staying in office have improved. Investors want to see stability, so what's good for Clinton is good for the market."

Stocks extended gains after the Starr Report was released. The Dow Jones Industrial Average rose 179.96, or 2.4 per cent, to 7,795.50, climbing about 150 points in an hour.

Upbeat forecasts from Intel and American Express offered investors some rare good news after eight weeks of declines.

US stocks began a two-month plunge in mid-July on concern that corporate profits are being cut by economic slumps in Asia, Russia and Latin America. But this week the Dow rose 2.0 per cent and the S&P 500 added 3.6 per cent. Most of the week's gains came on Tuesday when the average jumped 380 points, its biggest one-day point gain ever, after Federal Reserve Chairman Alan Greenspan signalled the possibility of a reduction in interest rates if the US economy slows.

The rally that drove long-term bond yields to record lows last week could reverse course unless the Federal Reserve cuts interest rates by at least half a percentage point by the end of the year.

Yields on Treasuries due from two to 30 years are all below the Fed's 5.5 per cent target, the first time that's happened since 1990. Some investors expect the Fed to make a half-point cut in one swoop on 29 September - something that hasn't happened since July 1992. They say the Fed needs to lower rates to help quell financial turmoil overseas and bolster US growth.

If Fed officials do that, "they will have effectively confirmed what the market has done," said Closson Vaughan at Columbia Partners in Washington. "If the Fed eases only 25 basis points and says it's only an insurance- policy-type step, two-year notes are going to get killed," he added.

Two-year notes, among the most sensitive to Fed rate policy, now yield 4.68 per cent. "It's dangerous in here," given how low yields have fallen, said Jim Somers at Martindale Andres in Pennsylvania. "The Fed has got to ease probably 100 basis points to support the levels we're at right now - at least."

PROMOTED VIDEO
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz