Wall Street report: Tuesday close

ALAN Greenspan delivered the verdict investors had been expecting by hinting that he was moving closer to raising official interest rates. The Federal Reserve Board chairman and his colleagues emerged from their meeting in Washington to say they had left interest rates unchanged. But they also changed their bias from lowering rates to a neutral stance as the US economy showed signs of rebounding.

'The information that has become available since the last meeting of the Committee indicates that the economy, bolstered by a marked swing in inventory investment, is expanding at a significant pace,' the Fed said in its statement. 'Nonetheless, the degree of the strengthening in final demand over coming quarters, an essential element in sustained economic expansion, is still uncertain.'

Economists said the words shifted the Fed one step closer to raising rates for the first time since May 2000. The Dow Jones Industrial Average, up 70 points just before the announcement, closed ahead 57.50 points or 0.5% at 10,635.25. The Nasdaq Index fell 10 points after the announcement but finished ahead 3.81 points or 0.2% at 1880.87.

Most Fed watchers do not expect a rise in official rates at least until May, despite signs of growing momentum in the economy. Inflation, which the Fed watches closely, has remained in check.

'A move to a neutral view on the economy does not necessarily indicate that the Fed will be raising rates soon,' said Richard Nash, chief market strategist at investment firm Victory Capital Management. 'Historically,

the Fed has initiated a tightening cycle about six months after the end of a recession when the unemployment rate has stabilized.' He said he did not expect the Fed to raise rates, at their lowest levels since John F. Kennedy was in the White House, until its meeting at the end of June.

Another vote also held investors' attention, with Hewlett-Packard management led by chief executive Carly Fiorina claiming victory in its fight to push through a merger with personal computer maker Compaq. H-P investors did not seem thrilled with the news as its shares fell 45 cents or 2.3% to $18.80. Compaq rose 78 cents or 7.5% to $11.14.

Personal products maker Procter & Gamble, which has Tide, Comet and Cheer among its cleaning brands, saw its shares jump $2.20 or 2.5% to $89.86 as it reaffirmed its profit targets and said business was strong.

Rival Colgate-Palmolive chimed in with similar positive comments and its shares gained 45 cents or 0.8% to $56.88. Dial, which also makes soap, surged 66 cents or 3.9% to $17.69 on positive company comments. Bleach maker Clorox confirmed its profit guidance and its shares closed fractionally higher at $44.44.

Positive analyst comments on the financial and brokerage sectors helped push Merrill Lynch higher by $1.48 or 2.7% to $55.98. JP Morgan climbed 75 cents or 2% to $36.09 and Lehman firmed $1.68 or 3.3% to $66.23. Goldman Sachs beat analysts' first-quarter profit estimates despite a 32% drop in net income and its shares shares strengthened $1.85 or 2% to $91.05.

Techs were narrowly mixed, with Cisco Systems ahead 22 cents or 1.3% to $16.74, Microsoft up marginally at $62.23 and Intel steady at $31.72.