Markets React to Fed's Interest Message
Jan. 26-30, 2004
Sunday, February 1, 2004; Page F09
Stocks
The nine-week charge by the Standard & Poor's 500-stock index was ended by the Federal Reserve's reminder that interest rates won't remain low forever.
The Fed's decision Wednesday to alter previous language that it would hold down rates for "a considerable period" triggered a sell-off that tilted the market down for the week.
The fear of rising rates was eased Friday by news that the economy's growth rate slowed in the fourth quarter to a 4 percent annual pace. That minimizes the threat of an immediate hike in rates. Slower growth wasn't good for the market, either, but it produced far less reaction than the Fed's word usage.
The S&P 500 was off 10 points for the week, the Dow Jones industrial average was down 80 points and the Nasdaq Stock Market composite index lost 57 points.
The losses by the S&P and Dow amounted to only a fraction of a percentage point, but the Nasdaq retreated 2.7 percent. Emotional tech investors who were so enthusiastic on the way up look like they're going to be just as overwrought as the market regroups.
-- Jerry Knight
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