Stocks Rise Ahead of Federal Reserve Meeting

Strategic Insights -

Stock prices surged on the New York Stock Exchange ahead of the Federal Reserve meeting, with the blue-chip Dow Jones industrial average gaining 103.85 to 11,204.46. Analysts expect a quarter-point hike in U.S. interest rates, and the Federal Open Market Committee (FOMC) is likely to maintain a neutral policy stance. Technology stocks, including AOL, Microsoft, and Forte Software, also moved higher.

Key Takeaways:

  • The Dow Jones industrial average gained 103.85 to 11,204.46, with the Nasdaq Composite Index rising 38.32 to 2,686.65 and the S&P 500 index increasing 13.10 to 1,349.70.
  • Analysts expect the FOMC to hike U.S. interest rates by 0.25 percentage point to 5.25 percent, with some speculation about a possible neutral policy stance.
  • Technology stocks, such as AOL, Microsoft, and Forte Software, were among the top performers, driven by buy ratings from analysts and speculation about Year 2000 problems.
  • Sun Microsystems' announcement to acquire Forte Software in an all-stock deal valued at approximately $540 million was expected to bolster its networking computing business.
  • The Schwab Center for Investment Research warned against market timing, citing the poor performance of the stock market in August, with the S&P 500 falling by 9%, 6%, and 14.5% in August 1990, 1997, and 1998, respectively.
  • Centura Banks Inc. agreed to acquire Triangle Bancorp Inc. in a stock deal valued at $608.4 million, expanding its market share in key metropolitan areas throughout North Carolina.

Statistics:

  • The Dow Jones industrial average gained 103.85 to 11,204.46.
  • The Dow Jones industrial average rose by 103.85 in early trading.
  • The Nasdaq Composite Index increased by 38.32 to 2,686.65.
  • The S&P 500 index rose by 13.10 to 1,349.70.
  • Analysts expect a 0.25 percentage point hike in U.S. interest rates to 5.25 percent.
  • The deal to acquire Forte Software was valued at approximately $540 million.
  • The S&P 500 fell 9%, 6%, and 14.5% in August 1990, 1997, and 1998, respectively.
  • Centura Banks Inc. acquired Triangle Bancorp Inc. in a deal valued at $608.4 million.

Sources:

  • Bloomberg News: "Stocks Rise Ahead of Federal Reserve Meeting"
  • Dow Jones Industrial Average: 11,204.46
  • Nasdaq Composite Index: 2,686.65
  • S&P 500 index: 1,349.70
  • Federal Reserve: FOMC meeting
  • Sun Microsystems: Acquisition of Forte Software
  • The Schwab Center for Investment Research: "Summer Rally" theory
  • Centura Banks Inc.: Acquisition of Triangle Bancorp Inc.
  • COMTEX: News provided by http://www.comtexnews.com