Interest rates fall sharply; Stocks climb
Interest rates tumbled in reaction to news that the economy is disappointingly weak, and the lower rates pushed stocks higher.</br></br>The Dow Jones Industrial Average rose 13.97 points to 3567.42, just shy of Monday's record. Standard & Poor's 500-stock index gained 3.05 to 450.24, and the Nasdaq Composite Index added 1.65 to 707.24.</br></br>Bonds started climbing after the Commerce Department reported that the economy grew at an anemic 1.6% in the second quarter, far below analysts' expectations. The rally accelerated as foreign investors scrambled to buy U.S. Treasury bonds as Europe's Exchange Rate Mechanism came under siege again.</br></br>By late afternoon in New York, the yield on the Treasury's 30-year bond had plunged to 6.57% from 6.65%.</br></br>"Clearly, the gross domestic product figures were very constructive because they showed the best of all possible worlds for the bond market," said William Sullivan, money market economist at Dean Witter Reynolds.