Dow Climbs to Record On Rate, Budget Hopes; Reports of Fidelity Buying Lift Tech Stocks
Hopes of an interest rate cut by the Federal Reserve Board and sweet talk about the federal budget stalemate helped persuade investors to push the stock and bond markets up today.</br></br>The Dow Jones industrial average climbed 50.57 points, to a record level of 5242.84. Bond prices also went up, in turn reducing the yield on 30-year Treasury bonds to 6.03 percent from 6.09 percent.</br></br>Analysts said technology stocks did particularly well, both because they were due to rebound from heavy selling earlier in the month and because of reports that a big mutual fund, Fidelity Investments, was buying them in large amounts.</br></br>Expectation of an interest rate cut dominated talk on trading floors, analysts said. "Some of the new economic data show some signs of weakness in the economy," leading to speculation that the Federal Reserve may cut short-term rates at its scheduled policy meeting next week, said Richard McCabe, first vice president and chief market analyst at Merrill Lynch & Co.</br></br>"It's in anticipation of a rate cut," Fredric E. Russell, a money manager in Tulsa, said of today's market performance. "The politicians wrangling over budget cuts have obscured the fact that the economy is sufficiently weak to warrant a rate cut."