Greenspan leads stocks higher
Stocks rebound from earlier losses and close in positive territory following comments by Fed chairman Greenspan.
Greenspan noted that "investor fright" during the past quarter had pulled cash away from equities, but predicted that fears may dissipate "and yield spreads and liquidity premiums will soon fall into more normal ranges."
Greenspan did not comment on whether returning investor confidence in the markets may reduce pressure on the Fed to again cut interest rates. During the speech, investors were looking for any hints of possible cuts ahead of the Federal Open Market Committee meeting on November 17.
The Dow Jones Industrial Average fell as much as 68 points before Greenspan began his talk, but after his comments, both the blue chip index and the technology-heavy Nasdaq Composite Index climbed higher.
The Dow gained 132.33 or 1.51 percent to close at 8,915.47. This the seventh consecutive day that the blue chip has ventured into positive territory. The Nasdaq jumped 13.52 or nearly 0.74 percent, to 1,837.09.
Greenspan expounded at length on the causes of the current global economic crisis, and what might be done to reverse or stem the damages. He noted that the big difference between the current turmoil and previous crises was the rapid pace at which capital now moves among countries.
Other economic news that may have dampened the market this morning was a Labor Department report on employment, which the department accidentally reported a day in advance on its Web site. U.S. payrolls grew by 116,000 last month, after an upwardly revised gain of 157,000 in September. Economists polled by Reuters had, on average, projected a 178,000-worker increase.
"I think this testifies to the fact that the deceleration in the economy is well under way at this juncture,'' said Richard Berner, chief economist at Mellon Bank.
Portable storage drive maker Iomega continued to surge today, gaining 1 or 12.5 percent to 9, and was the most actively traded issue on the New York Stock Exchange with 29.5 million shares.
On the Nasdaq market, Cisco Systems was the most actively traded stock with 29.2 million shares traded. The stock climbed 2.25 or 3.43 percent to 67.81 after the company reported earnings that beat Wall Street expectations.
Reuters contributed to this report