BOOM ON STREET; INDEXES CLIMB ON FED'S NEUTRAL BIAS ON INTEREST.Byline: Eileen Glanton Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Stocks soared Wednesday, with some market indexes smashing through to record highs, as the Federal Reserve raised interest rates but hinted that a single, modest increase might be all that's needed to quell inflation. The Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. rose 155.45 to close at 10,970.80, rounding out a session that saw the index drop as much as 83 points in morning trading, then pop over 11,000 for the first time since May 14. Wednesday's rally propelled broader market indicators to new closing highs. The Standard & Poor's 500 index rose 21.21 to 1,372.66, beating its previous record of 1,367.56 reached May 13. The Nasdaq composite index Nasdaq Composite Index An index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the Nasdaq System (approximately 5,000 stocks) and is weighted according to the market value of each listed rose 44.01 to close at 2,686.12, eclipsing the previous high of 2,652.05 set April 26. ``The market got a major relief rally,'' said John Shaughnessy, chief investment strategist at Advest Inc. Bond prices, battered for weeks by the threat of inflation and higher interest rates, also recovered, sending yields on the 30-year Treasury bond falling to 5.96 percent from 6.06 percent late Tuesday. The Fed's Open Market Committee surprised few with the announcement of a quarter-percentage point increase in short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. . But the committee also returned to what's called a neutral bias on interest rates, which indicates Fed officials believe they might not need to follow up Wednesday's rate action with additional increases. Traders welcomed the Fed's announcement, hoping for an end to the volatile price swings and sluggish trading that has characterized the market since mid-May, when the Fed first signaled its willingness to raise rates in an effort to hold inflation down. Bank and brokerage stocks were among the first to benefit, as the Fed's future course appeared less punishing than previously feared. Shares of those companies are particularly vulnerable to higher interest rates, which cut into lending volume. J.P. Morgan rose Morgan Rose (born December 13th, 1968) is the drummer and founding member of the Atlanta-based alternative metal band Sevendust. He is also responsible for much of the background "screaming" vocals. $4.75 to $140.50, the strongest gainer among Dow components. Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. Dean Witter Dean Witter may refer to:
Analysts were quick to caution that the Fed's neutral bias leaves it plenty of room to impose higher rates if it finds further indications that inflation has crept into the still-booming economy. ``They did not close the door on further rate increases,'' said Michael Moran, chief economist at Daiwa Securities America, who expects the Fed to raise rates two to four more times - each time by a quarter percentage point - over the course of the next 12 months. Wednesday marked the end of the second quarter and first half, and some money managers shifted their portfolios up to the last minute, hoping to settle positions left in limbo while investors awaited the Fed's announcement. CAPTION(S): Photo, Chart PHOTO (Color) Troy Walker, center, reacts as trading explodes Wednesday at the Chicago Mercantile Exchange Chicago Mercantile Exchange (CME) Chicago Mercantile Exchange (CME) is the largest futures exchange in the United States and the second largest exchange in the world for the trading of futures and options on futures. after the Fed's announcement. The exuberant mood also was evident at the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . Beth A. Keiser/Associated Press CHART: INFLATION CONTROL The Federal Reserve uses interest rate increases to ensure that inflation rises at a modest rate. Here is a look at changes in the federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. and the Consumer Price Index. Associated Press |
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