Financial markets were unscathed and unimpressed today as Federal Reserve Chairman Alan Greenspan reasserted the Fed's willingness to raise interest rates at any sign of a rebound in inflation.
Market indexes ended a quiet session with mixed results. The Dow Jones industrial average fell 6.97 points to close at 10,995.82. The blue-chip index spent much of the afternoon in positive territory before falling back in the final hour of trading.
Broader stock indicators, however, were modestly higher. The Standard & Poor's 500 rose 2.56, to 1365.40, and the Nasdaq composite index rose 26.51, to 2705.84.
Last Thursday, Greenspan surprised Wall Street by telling the House Banking Committee the Fed remains on watch for inflationary pressures and may be willing to raise interest rates again to hold off inflation. Stocks slumped through Tuesday, when the Dow picked up 115.88 points.
Greenspan reiterated his concerns before the Senate Banking Committee today. But traders said that this time around, they anticipated the remarks.
"When his comments turned out to be moderate, and didn't include anything new on interest rates, the market was able to rally a bit," said Anthony O'Bryan, market analyst with A.G. Edwards & Sons in St. Louis. "But the sigh-of-relief rally was short-lived."
Analysts said the next wave of government economic data should offer clues on whether inflation has encroached on the economy. Today, a Commerce Department report said that orders to U.S. factories for big-ticket manufactured goods rose just 0.3 percent in June--less than analysts had anticipated, and a fresh sign that the economy has not overheated.
Financial stocks, which are highly sensitive to fluctuations in interest rates, were mixed throughout the session. American Express, which rose Tuesday after a strong profit report, gave up early gains to close down 1 1/8 at 141 1/4. Brokerage Charles Schwab rose 2-7/16, to 48.
Internet stocks were mostly lower. Mindspring, an Internet service provider, fell 4 3/4, to 35 1/2, a day after the company said it will spend heavily to develop its business. While Mindspring beat analysts' expectations for its second-quarter earnings, the company warned that earnings will slide in the next three quarters as marketing costs increase.
But while Internet shares slipped, other computer-related companies rose amid growing sentiment that the market for personal computers is thriving. Chipmakers Intel, up 2-11/16 at 70 1/4, and Micron Technology Inc., up 3-11/16 at 61-9/16, led the gainers.
And the latest Internet retailer to make its initial public offering rose heartily. Drugstore.com, which was priced at 18, hit a high of 70 before trailing off again to close at 50 1/4.
Technology stocks received a boost from the Financial Accounting Standards Board, which elected not to change the way companies account for research and development work acquired through acquisitions. Analysts said highly acquisitive technology companies could have been hurt by such an accounting change.