Posted on: Wednesday, April 13, 2005
Fed news, oil prices keep stocks from falling
By Michael J. Martinez
Associated Press
NEW YORK — Reassuring words from the Federal Reserve triggered late-session stock and bond rallies yesterday, as minutes from the Fed's March 22 meeting showed it planned to stick with "measured" interest rate hikes, at least in the short term. A sharp drop in oil prices also helped Wall Street recover.
"What the Fed's saying here is basically that the economy is doing all right and that we've got our eye on the ball," said Bryan Piskorowski, market analyst at Wachovia Securities. "The market was going into this expecting the worst, and now that we see a little less hawkish demeanor with this announcement, the market's got some wiggle room."
Stocks fell early in the session after the Commerce Department said the nation's trade deficit hit an all-time high of $61 billion in February, a 4.3 percent increase over January that was far more than economists had expected. While U.S. exports rose by just $50 million, imports soared by $2.58 billion.
The trade deficit news initially heightened fears that the Federal Reserve would have to raise interest rates aggressively to shore up the dollar. But the Fed minutes assuaged those fears, at least for the short term.
Advancing issues outnumbered decliners by about 8 to 5 on the New York Stock Exchange, where consolidated volume came to 2.03 billion shares, compared with 1.6 billion shares traded on Monday.
While the possibility of higher and more aggressive interest rate hikes remains a concern, investors were relieved to see that the Fed's Open Market Committee was willing to keep interest rate hikes minimal even as signs of inflation in the economy increased.
