Posted on: Friday, June 10, 2005
Greenspan's optimism, Intel gains boost stocks
By Meg Richards
Associated Press
NEW YORK — Stocks bounded higher yesterday as bullish congressional testimony from Alan Greenspan and anticipation for a strong midquarter update from Intel Corp. brightened Wall Street's mood and overshadowed a surge in oil prices.
"Once everyone sifted through all the comments, the realization was that he hasn't changed his thoughts about the economy," said Peter Cardillo, chief strategist at S.W. Bach & Co. in New York. "He doesn't think the economy is ready to fall off a cliff, and that's basically a strong fundamental for the stock market."
Greenspan's remarks had some analysts speculating that the Fed would likely continue raising short-term rates through the third quarter. With the rate cycle's end in sight, stock investors can look forward to more stability, said Hans F. Olsen, chief investment officer at Bingham Legg Advisers, a private wealth management firm in Boston.
Bonds were moderately lower, however. The yield on the 10-year note rose to 3.95 percent from 3.94 percent late Wednesday. The dollar was higher against other major currencies and gold prices fell. Crude oil surged $1.74 to settle at $54.28 per barrel on the New York Mercantile Exchange a day after posting a steep decline.
Intel boosted its second-quarter revenue forecast on better-than-expected demand for its notebook computer chips, a sign that the semiconductor industry is gaining strength. The Dow component expects sales to be between $9.1 billion and $9.3 billion for the period ending July 2, at the upper end of the $8.6 billion to $9.2 billion range it forecast in April. Analysts, on average, are expecting sales of about $8.99 billion.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange. Consolidated volume came to 1.88 billion shares, compared with 1.76 billion traded Wednesday.
The Federal Reserve chairman told lawmakers the economy seems to be on "reasonably firm footing," with inflation under control. His generally positive assessment supports the view that the Fed, which has raised interest rates eight times over the past year, will likely continue nudging rates higher at a gradual pace. Fed policymakers are widely expected to raise the federal funds rate by another quarter-point to 3.25 percent at their next meeting, set for June 29-30.
