Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 5, 1994 TAG: 9404050171
SECTION: NATIONAL/INT PAGE: A-1 EDITION: METRO
SOURCE: From The Associated Press and Los Angeles Times NOTE: lede
DATELINE: LENGTH: Medium
``I think they'll come back down,'' Clinton said in a television interview in Cleveland.
His comments appeared to reflect a concerted administration effort to put pressure on the Federal Reserve Board to keep interest rates in check.
The Fed, signaling its concern that the economy was growing so quickly it might generate a new round of inflation, has raised short-term interest rates twice in the past two months. Those moves triggered the recent fall in stock and bond prices because they fueled investors' fears of slower economic growth ahead.
Clinton, contradicting the Fed's prognosis, insisted: ``There is no inflation in this economy. I don't think there is anything to worry about in terms of the long-term health of the economy.''
Clinton said the recent plunge in the stock market reflected investors' judgment that the market, after rising steadily for almost four years, was ``somewhat overvalued.'' He urged small investors not to panic.
``I don't think the fears of rising inflation are well-founded,'' said Barry Rogstad, president of the American Business Conference, which consists of 100 high-growth corporations. ``I think what the president is doing is a valid and appropriate role for a leader - to stand up and give a sense of what is going on here.''
Stocks plummeted again Monday in violent spasms of selling that sent the Dow Jones industrial average down more than 40 points to a six-month low, renewing a decline that gripped the market last week.
Still, there were no signs of a much more cathartic drop in stocks as some investment professionals had feared. Although the market bounced around in heavy trading, buyers emerged to exploit price drops.
Anecdotal evidence showed that millions of small investors - the underpinning of the market's vitality over the past few years - haven't been goaded into selling. That was regarded as a healthy sign.
At Fidelity Investments, the nation's leading purveyor of mutual funds, spokeswoman Jane Jamieson said, ``The outflows from our stock funds are quite small.'' Sometimes during the day, she said ``there was more buying activity than selling.'' Millions of people own stocks through the purchase of mutual funds
By the end of the day, several big investment firms were recommending purchases of stocks and bonds, asserting that they were underpriced.
The Dow average of 30 premier U.S. stocks plummeted more than 60 points at the outset of trading, yo-yoed in negative territory and finished at 3,593.35, down 42.61 points from Thursday and the lowest point since Oct. 11.
The average is now off 4.5 percent from a week ago and 9.7 percent from its all-time high of 3,978.36 reached Jan. 31.
by CNB