Posted on: Wednesday, June 8, 2005
Interest-rate remarks help erase early gains
By Michael J. Martinez
Associated Press
NEW YORK — Wall Street gave up a substantial early gain and staggered to a mixed finish yesterday after a Federal Reserve official warned that interest rates might continue to climb.
It was an earlier, bullish assessment of the economy from Fed Chairman Alan Greenspan, given in a speech broadcast at a meeting of central bankers in Beijing late Monday, that triggered the initial advance. Greenspan said the economy would remain strong and intimated that the Fed could soon stop raising interest rates, at least for the short term.
With seemingly dueling comments from the Fed committee members, investors remained confused as to whether the economy was headed for a harsh slowdown and whether the Fed would continue raising interest rates through the summer.
"The cross currents here are nothing like I've ever seen," said Brian Pears, head equity trader at Victory Capital Management in Cleveland.
Advancing issues outnumbered decliners by nearly 5 to 2 on the New York Stock Exchange.
Consolidated volume came to 1.91 billion shares, compared with 1.57 billion traded on Monday.
The Dow Jones industrials surged more than 111 points before Jack Guynn, Federal Reserve Bank of Atlanta president, said in a speech that the Fed's Open Market Committee was not ready to stop its policy of modest rate hikes. The comments set off profit-taking that left the Dow with a minimal gain and the Standard & Poor's 500 and Nasdaq composite indexes with slight losses.
