Industrials Surge 30.95 in Reaction to Drop in Rates, Strong Earnings
NEW YORK -- Stocks rallied in an old-fashioned reaction to declining interest rates and strong earnings reports.</br></br>The Dow Jones Industrial Average rose 30.95, or 1%, to 2905.45. At its peak, the industrial average was up about 50 points. New York Stock Exchange volume totaled 196,570,000 shares, the strongest in a week. Advancing issues swamped decliners, 1,108 to 508.</br></br>Short-term interest rates tumbled yesterday as investors began to anticipate another interest-rate cut by the Federal Reserve Board. They were encouraged by Thursday's weak inflation and retail sales reports. The producer price index for March slipped 0.3%, while the core of the index, minus food and energy prices, added only 0.2%. Retail sales in March fell 0.8%.</br></br>Many analysts believe the data give the Fed an opportunity to lower rates while maintaining its anti-inflationary stance. Some expect the Fed to act today if the slowing producer inflation numbers are confirmed by evidence of moderating consumer price increases. The consumer price index will be released at 8:30 a.m. EDT.</br></br>"It is amazing how the mentality on the Street is changing so rapidly," asserted Richard Meyer, head of equity trading at Ladenburg, Thalmann & Co. "The numbers came out and everybody who was gloom and doom wants" to own stocks.