Dow Falls 7 on Interest Rate Concerns
Blue-chip stocks closed lower today, hurt by further losses in the bond market and signs that the Federal Reserve is unlikely to reduce interest rates any time soon to bolster the economy.</br></br>The Dow Jones industrial average closed down 7.15 points at 2986.81. Volume on the New York Stock Exchange was a moderate 154.9 million shares.</br></br>A 19-point rally lost steam when Fed Chairman Alan Greenspan said it was too early to say the recession is over.</br></br>But Greenspan did tell the House Ways and Means Committee that recent data suggest the slump is bottoming out in the current quarter, which ends this month. While Greenspan suggested that low world inflation should stabilize the foreign-exchange markets and that the U.S. economy may already be at a bottom, he also admitted that the United States "is still in the grips of a credit crunch."</br></br>Greenspan said: "We as yet do not see any turn or any marked easing in the credit crunch," which is making banks reluctant to reduce lending rates even though their cost of funds has been declining.