The Wall Street Journal-20080130-Dow Industrials Rise 96-41 Ahead of Fed Rate Decision

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Dow Industrials Rise 96.41 Ahead of Fed Rate Decision

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Stocks rose as investors awaited today's decision on interest rates from the Federal Reserve

News about the economy was mostly upbeat, starting with surprisingly strong data from the Commerce Department on purchases of big-ticket items in December. The House passed a $146 billion fiscal stimulus bill. Although the Conference Board, a private research group, reported a decline in its index of consumer confidence in January, the reading was higher than analysts had expected.

The Dow Jones Industrial Average rose for a second straight day, finishing 96.41 points higher, or 0.8%, at 12480.30. The industrials are down 5.9% so far this year and 12% off their October record high.

Investing pros expect a half percentage-point cut in the Fed's target rate, to 3%, when its two-day meeting ends today, which would follow a three-quarter-point cut last week.

They could be disappointed if the Fed makes a more modest move or includes language in its policy statement about the need to keep inflation in check. But most analysts believe those concerns can be cast aside for now in lieu of the bigger threat to the U.S. economy: a potential recession.

The financial sector and a broad array of commodity prices have benefited recently from expectations of lower rates. Fed cuts would lower costs for financial companies that make profits using borrowed money. Lower rates also would buoy prices for natural resources traded globally in dollar terms.

Led by financial stocks, the Standard & Poor's 500-stock index rose 0.6%, or 8.33 points, to 1362.30, down 7.2% in January.

Financials were up 1.5% as a group. The S&P's energy components rose about 1%, helped by a fourth consecutive rise in crude-oil prices. All of the S&P 's sectors finished with gains.

The Commerce Department said December orders for durable goods jumped by 5.2%, more than twice the rise forecast by Wall Street economists.

Although the House passed a package of tax rebates by a landslide vote, the bill faces an uncertain future in the Senate.

In late New York trading, the dollar strengthened. The euro fell to $1.4773 from $1.4784, while the dollar rose to 107.08 yen from 106.86 yen late Monday.