Closing Market Report

Star-Bulletin news services

Tuesday, August 24, 1999

Dow slips 16.46

NEW YORK -- After some initial confusion, investors today welcomed the Federal Reserve's long-expected decision to raise interest rates a quarter percentage point, sending most stocks higher even as blue-chips fell back slightly.

The Dow Jones industrial average fell 16.46 to close at 11,283.30. The Fed's mid-afternoon announcement sparked a volatile afternoon on Wall Street, as the index jumped more than 65 points from yesterday's record close, then tumbled as much as 105.43 points before regaining ground.

Broader stock indicators ended higher. The Standard & Poor's 500 rose 3.28 to 1,363.50. The Nasdaq composite index rose 32.80, or 1.2 percent, to 2,752.37.

Decliners beat advancers by a 4-to-3 margin on the New York Stock Exchange, with 1,686 down, 1,282 up and 570 unchanged. NYSE volume totaled 724.19 million shares vs. 679.40 million yesterday. The NYSE composite index slipped 0.93 to 633.88 and American Stock Exchange composite fell 3.09 to 789.42. The Russell 2000 index of smaller companies fell 0.13 to 437.12.

Treasury bonds, meanwhile, rose after the widely anticipated Fed move. Bond prices, which have improved steadily over the past week, rose again today - by 23/32, or $7.19 per $1,000 face value. The yield on the 30-year Treasury bond fell to 5.93 percent, from 5.98 percent late yesterday.

Bonds, which are highly sensitive to inflation, drew support from the Fed's statement that today's increase "should markedly diminish the risk of rising inflation going forward." The central bank also held to a "neutral bias," indicating it may leave rates untouched in the immediate future.

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