Posted on: Friday, February 18, 2005
Economic uncertainty depresses stock prices
By Meg Richards
Associated Press
NEW YORK — Stocks stumbled yesterday as mixed economic news and further hints of higher interest rates from Federal Reserve Chairman Alan Greenspan kept buyers at bay.
"Greenspan is doing a good job of preparing American investors for what's ahead: We're in a period of rising interest rates and that's going to continue," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. "He's done an excellent job of balancing the hikes, letting people know it's going to continue, and the market's done a good job of factoring that in. I don't think anything he's saying is shocking anybody."
Analysts attributed the day's trading to a lack of certainty about the strength of the economy, the pace of inflation and how much higher interest rates will go.
Decliners outnumbered advancing issues by almost 2 to 1 on the New York Stock Exchange. Preliminary consolidated volume came to 1.97 billion shares, compared with 1.88 billion traded Tuesday.
The Fed chairman offered a modest endorsement of President Bush's idea of setting up private retirement accounts for younger workers in testimony before the House Financial Services Committee, but said that alone won't solve Social Security's long-term problems. Reiterating remarks made to a Senate panel Wednesday, Greenspan said the economy continues to expand at a respectable pace, and that inflation, while not an immediate threat, remains something policymakers must guard against. There were few surprises in his comments, but analysts said they served as a reality check for investors.
