Greenspan Remarks Spark Stock Market Rally

Alan Greenspan was typically vague, but it was enough to hold out hope for steady interest rates and stocks rallied Thursday as the market continued a rebound from the precipitous slide as the week began.

The Dow Jones industrial average rose 87.30 to 5,464.18, about 9 points shy of its high for the day.

The blue-chip barometer and broader stock measures had given back some opening gains before jumping higher with bonds following a semiannual economic report by Greenspan, the ever-cautious Federal Reserve chairman.

Greenspan confirmed expectations Fed policymakers are ready to nudge short-term interest rates up should inflationary pressures rise. But he also took pains to leave his options open, predicting a moderation in economic growth that would restrain inflation.

“It was a tone of ‘wait-and-see,’ and a ‘wait-and-see’ tone is better than ‘we expect to raise rates now because we see a runaway economy,”’ said Peter Anderson, chief investment officer at IDS Advisory Group in Minneapolis.

Advancing issues outnumbered decliners by nearly a 3-to-1 margin on the New York Stock Exchange, where volume was heavy at 469.65 million shares, but trailed Wednesday’s hectic pace.

Some of the stocks that moved substantially or traded heavily Thursday:

NYSE

AT&T, down 2-1/4 at 54.

The telecommunications giant reported a second-quarter profit of $1.52 billion, up 11 percent from comparable operations a year ago. After the report, PaineWebber downgraded its opinion on the stock.

Lucent Technologies, up 1-7/8 at 37-3/4.

Finishing its first full quarter as an independent company, Lucent earned $72 million from April to June, down 55 percent from a year ago due to expenses relating to its spinoff from AT&T. But the profit amounted to 11 cents per share, slightly ahead of analysts’ expectations.

McDonald’s, up 1-1/8 at 45-3/8.

The fast-food chain reported its second-quarter profits rose 11 percent from a year ago. The profit of $420.4 million, or 59 cents a share, was slightly above analyst estimates.

NASDAQ

Apple Computer, up 4 at 20-7/8.

The nation’s No. 3 computer maker reported a $32 million loss for its third fiscal quarter, far less red ink than expected.

AMEX

Trans World Airlines, down 1 at 10-1/4.

The airline’s jumbo-jet crash Wednesday evening could taint a stunning turnaround. On Wednesday, TWA reported a second-quarter profit of $25.3 million, up from $5.2 million a year ago. Revenue rose 12 percent.