Greenspan's remarks lift Dow 9.08

NEW YORK — NEW YORK -- U.S. stocks rose yesterday after Federal Reserve Chairman Alan Greenspan said there are signs that the economy is slowing, reducing the chances that the Fed will boost interest rates any time soon.

Speaking before Congress, Mr. Greenspan wouldn't rule out another rate increase and said some signs of inflation still exist. At the same time, he said a slowdown in the economy means the Fed eventually will move to ease its monetary policy.


"As long as we keep to a slow-growth, noninflationary environment, we're in good shape for continued price gains in stocks," said Brett Berry, a money manager at Bailard Biehl & Kaiser.

The Dow Jones industrial average rose for the seventh time in the past eight sessions, climbing 9.08, to 3,973.05 after being up about 23 points shortly after Mr. Greenspan's comments were released at 10 a.m. Eastern time. General Electric Co., Caterpillar Inc., General Motors Corp. and AT&T; Corp. rose the most.


Among broad market indexes, the Standard & Poor's 500 rose 2.35, to 485.07, after reaching a record 486.15 during trading. Electrical equipment, telephone, software, drug, utilities and auto stocks led the advance. The Nasdaq combined composite index rose 3.31, to 787.93, led by gains in Microsoft Corp., Oracle Systems Corp., Intel Corp. and Novell Inc.

Shares of drug company Pfizer Inc. rose $1.125, to $81.625, after the company said the U.S. Food and Drug Administration is considering approval of its oral drug cetirizine to treat three allergy-related ailments.

The outlook for stable interest rates helped shares of auto companies, which benefit when consumers can more easily finance big-ticket purchases like cars. The Morgan Stanley cyclical index of 30 stocks sensitive to swings in the economy rose 0.13, to 298.55.

Shares of General Motors Corp. rose 75 cents, to $41.75; Ford Motor Co. advanced 37.5 cents, to $26.625; and Chrysler Corp. weakened 37.5 cents, to $45.625, after being up as much as 50 cents earlier.

"The Goldilocks fairly tale of a soft landing is happening," said Peter Canoni, managing director of equity investments at Aeltus Investment Management Inc. The Fed will "sit back until May to decide whether to raise rates."

About four stocks rose for every three that fell on the New York Stock Exchange, where about 339.4 million shares traded hands. It was the first time in four sessions that advancing issues outpaced decliners.

The Russell 2000 index of small capitalization stocks rose 0.08, to 253.94; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, gained 17.98, to 4773.67; and the Amex market value index added 1.07, to 448.58.

Stocks got a lift from a rally in bonds and a drop in yields to the lowest level since Sept. 5. The benchmark 30 1/4 -year government bond's yield fell seven basis points, to 7.54 percent.


Semiconductor stocks rose after Philips Electronics NV said its earnings before extraordinary items more than doubled last year amid rising demand for chips. Shares of Intel Corp. rose 62.5 cents, to $79.625; Micron Technology Inc. added $2.75, to $59.125; Analog Devices Inc. gained $1, to $24.875; and Xilinx Inc. spurted 75 cents, to $63.25.

"The market's walking the fine line between high rates and improving earnings," said David Katz, chief investment officer of Matrix Asset Advisors. "It's going to be tough balancing act."

Major stock indexes have soared to new highs this month -- with the Dow industrials at one point climbing within 2.05 points of 4,000 -- as confidence grew that the economy was slowing enough to ward off inflation.

The Fed has raised interest rates seven times since Feb. 4, 1994, to cool the economy. Higher rates hurt stocks by raising borrowing costs and boosting the attraction of alternative investments.

Yesterday's most active stocks were Telefonos de Mexico SA's American depositary receipts, RJR Nabisco Holdings Corp. and Philips Electronic's receipts.

Dell Computer Corp. rose $1.50, to $46. The computer maker reported Tuesday that fiscal fourth-quarter earnings more than tripled as sales reached $1 billion for the first time.