Wall Street: Flying in the Face of Gloom

Flying in the Face of Gloom

If the U.S. economy is in such dismal shape, how come Wall Street feels so good? After five consecutive daily increases, the Dow Jones industrial average closed at a record 3101.52 last week. The bull run has pushed the Dow index up 167 points, or nearly 6%, since Dec. 20. That was the day the Federal Reserve Board lowered the discount rate -- which is what the Fed charges banks for borrowing money -- a full percentage point, to a 27-year low of 3.5%.

Wall Street's euphoria reflected investors' hopes that rock-bottom interest rates would help end the economic slump. "The...