Dow Ends Up 148; Nasdaq Gains 129
Thursday, July 20th 2000, 12:00 am
By: News On 6
NEW YORK (AP) â€” Stocks surged higher Thursday as investors, emboldened by Federal Reserve Board Chairman Alan Greenspan's encouraging remarks on the economy, poured back into the markets after two days of losses.
The Dow Jones industrial average closed up 147.79 at 10,843.87, according to preliminary calculations.
Broader stock indicators were also higher. The Nasdaq composite index erased all of Wednesday's losses, rising 128.93 to close at 4,184.56. The Standard & Poor's 500 index closed up 13.51 at 1,495.47.
Greenspan, in much anticipated testimony before a Senate committee, said the economy is showing signs of slowing.
In a nutshell, the Fed chairman said demand for goods appears to be slowing down such that it is approaching the supply, a dynamic that would keep consumer prices lower and stave off inflation.
The Fed has raised interest rates six times since last summer in an effort to fight inflation, and the strategy appears to be working. For example, construction of new homes last month fell to its lowest level in two years, according to data released Thursday.
``Many of the things Greenspan said were music to the ears of the investment community,'' said Robert Robbins, chief investment strategist at Robinson-Humphrey in Atlanta.
``Greenspan seemed less inclined to issue warnings and more receptive to the idea that inflationary pressures may not have been as bad as previously imagined during the past year,'' Robbins added.
Buoyant investors essentially ignored hints by Greenspan that the Fed remains concerned by the specter of rising inflation.
Banking stocks jumped in the wake of Greenspan's testimony on the belief that stable interest rates will help lubricate the lending industry. J.P. Morgan led the way, rising $4.50 to $134.50.
Technology stocks also saw across-the-board gains, led by fiber-optics company SDL Inc., up $68.438 to $428.063. The company is being acquired by parts maker JDS Uniphase.
JDS Uniphase shares also soared, rising $21.375 to $128.125, on news the company is being added to the benchmark S&P 500 index.
Computer maker IBM reported better-than-expected earnings after the market closed Wednesday. Investors flocked to the stock Thursday, pushing it up $12.907 to $117.063.
IBM's earnings was apparently the catalyst for the shift in momentum because Wednesday's selloff was spurred by disappointed investors who sold the shares of tech companies that reported solid earnings didn't live up to investors' high expectations.
One high-profile technology company missed the wave of optimism, however. Shares of Lucent Technologies fell $10.50 to $54.125 after the phone equipment maker warned investors that profits for the next two quarters will be lower then previously expected.
Advancing issues outnumbered decliners by a 4-to-3 margin on the New York Stock Exchange, where volume came to 1.06 billion shares, well ahead of Wednesday's pace.
The Russell 2000 index was up 6.89 at 534.75.
Overseas, Japan markets were closed for the holidays. Germany's DAX index was up 1.54 percent, Britain's FT-SE 100 was up 0.06 percent, and France's CAC-40 was up 1.06 percent.