December 02, 2007	Sunday	Ziqa’ad 21, 1428

NEW YORK, Dec 1: Upward momentum is back on Wall Street as stocks regained ground at the end of a horrid November, with hopes mounting that the Federal Reserve will cut rates and help the US economy avert a downturn.

The positive market action of the past week helped bring the market back from the edge of the precipice and send the stock market into December, traditionally one of the best months of the year, on an upbeat note.

But many analysts say the market is counting on lower interest rates from the Fed, which is set to meet on interest rates December 11.

In the week to Friday, the Dow Jones Industrial Average rallied 3.01pc to 13,371.72 after four consecutive winning sessions.

The broad market Standard & Poor’s 500 advanced 2.8 percent to 1,481.14 and the tech-heavy Nasdaq climbed 2.48 per cent to 2,660.96.

Despite the sharp gains for the week, the Dow index lost 4.0 per cent for November and the S&P index shed 4.4 per cent. The Nasdaq slid 6.9 per cent.

The sharp rebound for the market over the past week came amid conflicting signals about the US economy.

The government said the US economy expanded at 4.9 percent in the third quarter, the fastest pace in four years, but more recent data point to slower conditions.

Fed chairman Ben Bernanke said Thursday policymakers are carefully monitoring “mixed” economic data, with a depressed housing sector, strong labour market and consumer spending on the soft side. Bernanke’s comments were interpreted as all but guaranteeing that the Federal Open Market Committee would cut US interest rates at its December meeting, said Andrea Kramer at Schaeffer’s Investment Research,

Still, many traders remain worried that the economy and markets are not out of the woods, with the slide in housing hurting the financial sector as well as consumers.

The markets are taking (Bernanke’s) words as confirmation that the Fed will cut interest rates again at its policy meeting on Dec 11 and thereby rescue the economy, said Patrick Fearon, economist at AG Edwards.

The employment report could help frame the discussion at the FOMC meeting four days later, said Joseph LaVorgna and Carl Riccadonna at Deutsche Bank in a note to clients.

The Deutsche Bank analysts expect the Fed to keep cutting rates.—AFP