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Greenspan speaks, stocks move

Markets close higher after the Federal Reserve chairman dashes hopes of potential interest rate cuts.

3 min read
U.S. markets closed higher again today with the news that President Clinton had no plans to resign, offsetting afternoon declines after Federal Reserve chairman Alan Greenspan dashed hopes for any cuts in interest rates.

The Dow Jones Industrial Average closed up 65.39 points or 0.81 percent, to 8,089.78. The blue chip index saw a low today of 7,962.85. The technology-heavy Nasdaq gained 11.8 points to 1,689.91 after slipping earlier to 1672.66.

Appearing before the Congressional Banking Committee, Greenspan said today that there would be no coordinated interest rate cut by the global economic powers.

"I can safely say at the moment there is no endeavor to coordinate interest rate cuts," Greenspan said. "We are in fairly extensive conversation amongst the G10 central bank governors and we are clearly exchanging views on all various different aspects of our economy and our views of the overall international situation.

Greenspan said that the Fed's primary responsibility was to the health of the U.S. economy, but acknowledged that the economic crisis in Asia is likely to impact America.

"Even though we at the Fed perceive that our actions must be focused on the American economy, we are aware that we cannot do that without significant awareness of what is going on around the world and what our actions do to the rest of the world," Greenspan added.

In a speech Monday in New York, President Bill Clinton said he had asked Greenspan and Treasury Secretary Robert Rubin to meet with economic ministers in other nations to plan a strategy to overcome the financial challenges facing the global economy.

Wall Street was hoping that the world's major economic powers would take strong steps in turning around the economic crisis in Asia before it spreads virulently to Latin America, Europe, and North America.

Clinton, appearing with Czech president Vaclav Havel at a State Department press conference said he had no intention to resign, which helped U.S. stocks rise in late afternoon trading.

The President said that the American people wanted him to finish his term and added that "they want me to go on and do my job and that's what I intend to do."

A few technology stocks were lifted today as a result of analyst upgrades. Motorola rose as high as 8.9 percent before closing up 7.54 percent at 47.25. Driving the stock higher was an upgrade to "buy" from "hold" by a Warburg Dillon Read analyst. Lucent Technologies also fared well, closing at 76.5, up 2 points or 2.68 percent. A PaineWebber analyst upgraded the company to a "buy" from "attractive."

Meanwhile, Internet stock leaders Amazon.com and Yahoo posted double-digit gains today after Sunlogic Securities upgraded the online book giant and initiated coverage on Yahoo with a "buy" rating. Amazon gained 11.5 points or nearly 16 percent today to reach 84.5. Yahoo, for its part, added 9 points or more than 10 percent to finish at 93.375.

After several weeks of high volatility--both upward and downward--the Dow closed higher for the fourth straight day. The blue chip index is now up 2.28 percent for the year but still far below its peak of 9,367.84 on July 17.

Overseas markets are mostly higher with the exception of Japan's Nikkei which closed down less than half a percent or 29.67 points at 14,197.7. Hong Kong's Hang Seng closed up 1.64 percent or 127.21 points at 7,860.68. Germany's DAX was up 1.93 percent or 93.34 points at 4,924.56.