DJIA Soars 35.58 Points, Bonds Gain --- Economic Data Spur Renewed Speculation Fed Will Trim Rates
Investors placed some big bets on another cut in short-term interest rates, lifting stock prices sharply. Bond prices rose, too, while the dollar was mixed.</br></br>The Dow Jones Industrial Average shot up 35.58 to 3354.10 in active trading. Standard & Poor's 500-stock index climbed 4.74 to 412.88 and the Nasdaq Composite Index gained 5.39 to 568.99.</br></br>The stock market rally took off on the heels of a report from the nation's purchasing managers that showed a slowing in the rate of industrial activity in June. The decline was enough to fuel speculation that the Federal Reserve, which wound up a policy-making meeting yesterday, will cut short-term interest rates again soon.</br></br>Traders expect further impetus for the Fed to stimulate the economy to show up in today's Labor Department report on employment in June. The consensus forecast calls for non-farm payrolls to have risen a modest 83,000 in June. Such a small gain may alone be enough to force the Fed's hand; anything less will increase pressure on the central bank for a rate cut.</br></br>But James Solloway, director of research at Argus Research, said investors may be looking at the wrong data. He said his own reading of reports from Federal Reserve regional banks shows that the Fed is apparently satisfied with the rate of money growth and expects the economy to pick up steam later without any further assistance from the central bank.