Expected Fed decision
lifts Dow to 2002 high

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By Lisa Singhania
Associated Press

NEW YORK >> Wall Street's appetite for stocks held steady today after the Federal Reserve left interest rates unchanged for the time being but indicated that an increase was possible later this year.

Stocks ended the session higher, despite a pullback from an earlier rally. Analysts attributed the muted response to the fact the Fed move had been widely anticipated.

The Dow Jones industrial average closed up 57.50 at 10,635.25 after rallying as much as 95 points. It was the Dow's highest close this year -- 3 points higher than its previous record of 10,632.35 on March 12.

Broader stock indicators also rose. The Standard & Poor's 500 index advanced 4.74 to 1,170.29, and the Nasdaq composite index rose 3.81 to 1,880.87.

Advancers led decliners 8 to 7 the New York Stock Exchange, with 1,715 up, 1,421 down and 216 unchanged. Volume was 1.24 billion shares vs. with 1.15 billion yesterday.

The NYSE composite index rose 2.29 to 609.53, the American Stock Exchange composite index gained 1.63 to 899.06 and the Russell 2000 index advanced 1.93 to 504.73.

"Almost every market strategist coming into this had said the Fed would go to a more neutral posture and leave rates unchanged, and that's exactly what happened," said Bill Barker, investment consultant at RBC Dain Rauscher. "Maybe we'll see a rate hike at the next meeting or in June, but there's still enough uncertainty out there for them to wait."

In a statement issued after its regularly scheduled meeting, the Federal Reserve kept interest rates unchanged but hinted future hikes were possible. The central bank was cautious, however, noting that "the (economy's) degree of strengthening ... is still uncertain."

The Fed cut rates 11 times in 2001 in an aggressive effort to stimulate growth and help the economy emerge from recession. It will start raising rates when it believes business is strengthening, so that growth occurs at a reasonable, sustainable rate.

In trading today, Goldman Sachs rose $1.85 to $91.05 after reporting first-quarter results well above analysts' expectations.

Procter & Gamble advanced $2.28 to $89.94 after it boosted its forecast for the third quarter and fiscal year.

Tech stocks were more mixed. Intel rose 10 cents to $31.72, while Nokia dropped 68 cents to $21.73.

Hewlett-Packard fell 45 cents to $18.80 after its chief executive, Carly Fiorina, said it had won a closely contested shareholder vote to approve its merger with Compaq. The official results of the vote were not expected to be available for days. Compaq gained 65 cents to $11.01.

Stocks have been steadily advancing all month, although the pace has slowed in recent sessions as investors try to assess whether company profits will be strong enough to justify the gains.

Wall Street is particularly interested in first-quarter earnings reports, which begin next month. If the results are stronger than expected and companies' forecasts are bullish, stocks could rise even more. Disappointing reports might prompt investors to pull back.

Also, a Commerce Department report today showed that the U.S. trade deficit swelled to $28.5 billion in January because of increased oil imports and the lowest level of exports in more than three years.