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Dow jumps in rate relief
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June 28, 1999: 10:19 a.m. ET
Bond bounce tempts buyers into financial shares, technology
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NEW YORK (CNNfn) - Wall Street got a boost of confidence from a resurgent bond market Monday morning, as slipping bond yields soothed investors' concerns over an upcoming Federal Reserve interest-rate meeting.
Shortly before 10 a.m. ET, the Dow Jones industrial average was up 82.01 points at 10.634.57. Volume on the New York Stock Exchange reached a heavy 72 million shares, while advances crushed declines 1,620 to 689.
The Nasdaq composite added a relatively restrained 10.95 points to 2,563.60, while the S&P 500 index gained 9.84 to 1,325.15.
The bond market indulged in a tentative rally as investors covered their positions, while news that personal income data for May came in slightly weaker than expected encouraged the inflation-wary market to hope that wage inflation remains in check. The benchmark 30-year Treasury bond climbed 14/32 of a point in price, pushing the yield down to 6.11 percent.
Despite the benign income figures, investors in all U.S. financial markets were keeping one eye on the Federal Reserve, which meets Tuesday and Wednesday to determine interest rate policy. Most investors expect the Fed to raise the funds rate by 25 basis points, a quarter percentage point, to 5 percent.
The dollar was mixed in cautious trading, edging slightly higher on the euro but retreating from the yen.
Rate fears ease
The morning's show of strength in the bond market bled over into the stock market, where investors have fretted over the future of U.S. interest rates for weeks.
The Wall Street relief rally that followed was especially kind to interest-rate sensitive shares like financial-services. The sector followed bonds, a key reflection of long-term interest trends, higher on Monday, having joined the Treasury debt market in retreat through recent sessions.
Rising interest rates put pressure on the bottom line for financial firms like banks and brokers by making their primary business -- moving large sums of cash around -- relatively more expensive. Moreover, high interest rates impair lending, depriving banks of a vital source of revenue.
Among the Dow's financial components, American Express (AXP) surged 2-3/16 to 124-5/8 and Citigroup (C) climbed 3/4 to 44-9/16, while J.P. Morgan (JPM) gained 1-1/4 to 129-13/16.
Technology companies, which rely on heavy borrowing to finance corporate growth, also flourished in the morning's more relaxed tone toward interest rates, although the gains were more limited as investors continued to take some profits off the table.
Most technological bellwethers were marginally higher, with Microsoft (MSFT) climbing 3/4 to 85-11/16 and Cisco Systems (CSCO) edging up 1/2 to 61-13/16. Computer maker Dell (DELL) gained 5/16 to 37-1/4, while on the Dow Hewlett Packard (HWP) rose 15/16 to 93-9/16 and IBM (IBM) added 3/8 to 123-1/2.
In the day's deals news, energy-minded investors took heart from a $1.2 billion merger between regional power provider Wisconsin Energy (WEC) and natural gas supplier Wicor (WIC). Wicor shares gained 1-3/8 to 26-9/16, while Wisconsin Energy slipped 3/8 to 27-1/16. 
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