STOCKS ZOOM AFTER FED CUTS INTEREST RATES
Byline: Evan Clark
NEW YORK — Retail stocks saw some much-sought-after relief Wednesday when, in a surprise move, the Federal Reserve slashed interest rates a half-point to 6 percent.
The tech-laden Nasdaq, after getting pounded on Tuesday, closed up 324.82 points to 2,616.68, a 14.2 percent increase, while the Dow Jones Industrial Average jumped 299.60 points to 10,945.75, a 2.8 percent increase.
Brought almost to a frenzy by the rate cut, retail investors helped stocks regain some ground lost over the deflated holiday season. Some of the retailers riding the wave included: Wal-Mart, which closed up $4.56 to $58.44; Target, up $3 to $36.25; Federated Department Stores, up $3.31 to $37.69; J.C. Penney, up $1.44 to $12; American Eagle Outfitters, up $6.06 to $47.69, and The Limited up $1.50 to $17.94.
A statement from the Federal Reserve said the actions were taken “in light of further weakening of sales and production, and in the context of lower consumer confidence, tight conditions in some segments of financial markets, and high energy prices sapping household and business purchasing power.”
Despite this move, the first time the Fed has cut interest rates between scheduled meetings since October 1998, the statement said, “to date there is little evidence to suggest that longer-term advances in technology and associated gains in productivity are abating.”
The central bank’s next meeting is scheduled for Jan. 30.
Emanuel Weintraub, president of Emanuel Weintraub Associates Inc., a management consulting firm, told WWD, “This is a ‘welcome to Washington’ gift from Mr. Greenspan to Mr. Bush. If we had irrational exuberance on the way up, now we have rational negativity on the way down.”
According to Weintraub, Greenspan is signaling to the public that it’s doing something about the economy.
“Greenspan is saying, ‘Stop talking about a recession. Here’s a half-a-point rate cut to help.’ It doesn’t mean there won’t be another quarter-point rate cut if it is needed,” Weintraub observed.
Among vendors, who saw smaller gains, Jones Apparel Group was up $2.63 to $34.13; Guess, up 25 cents to $5.31; Kenneth Cole, up $2.69 to $42.88, and Fossil, up $1.75 to $15.75.