Posted on: Wednesday, December 15, 2004
S&P and Nasdaq climb to three-year highs
By Meg Richards
Associated Press
NEW YORK — The Standard & Poor's 500 and the Nasdaq composite index stretched to new three-year highs yesterday as investors welcomed a possible software merger and the Federal Reserve issued a widely expected interest rate hike.
Wall Street had been disappointed earlier in the day by the latest reading of the nation's trade deficit, which widened to a record $55.5 billion in October, more than the $52.4 billion that economists had expected. But while the numbers looked bad from a monetary point of view, they showed continued consumer spending.
Hans F. Olsen, chief investment officer at Bingham Legg Advisers, said that getting 2004's final Fed rate hike out of the way helped investors focus on other news. "There seems to be a reawakening of merger and acquisition activity, and signs are there that people are continuing to spend at a healthy clip," Olsen said."
Oil prices appeared to be holding steady in the $41 range. Light, sweet crude for January delivery settled up 81 cents, or 2 percent, at $41.82 per barrel on the New York Mercantile Exchange.
Advancing issues outnumbered decliners yesterday by almost 2 to 1 on the New York Stock Exchange. Preliminary consolidated volume came to 1.99 billion, compared to 1.82 billion traded Monday.
The Fed's Open Market Committee raised the benchmark interest rate by a quarter percentage point to 2.25 percent and released a statement that said low inflationary pressures should allow it to continue tightening rates at a "measured" pace. The language, nearly identical to the Fed's Nov. 10 statement, was reassuring to investors.
