The Stock Market

How high is too high?

Introduction

The U.S.stock market has climbed to record heights in the 1990s, driven by a prolonged economic expansion and explosive growth in mutual funds. The growing number of investors — more than 40 percent of U.S. households — are delighted. But the Federal Reserve Board is worried that stock prices have gone too high. Fed Chairman Alan Greenspan warned in December of “irrational exuberance” in the market, and the Federal Reserve raised interest rates in late March to try to cool the economy and ward off inflation. The move caused the markets to slide, but blue-chip stocks began climbing again in April. Now the markets are waiting to see whether the Fed will raise interest rates again.

The trading floor at the New York Stock Exchange 

(Photo Credit: ...

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