"These developments are encouraging signs, but they are no guarantee that a sustained solid expansion of final demand has gained traction, and we will be monitoring economic developments closely in coming months," he added.

Ferguson described the current federal funds rate of 1.75 percent -- a 40-year low for the bellwether rate after 11 interest rate cuts in 2001 -- as "accommodative" and said that monetary policy had "substantially cushioned" the blows that hit the economy last year.

Fed policymakers hold their next scheduled meeting on May 7 amid wide expectations they will leave borrowing costs untouched.

Ferguson noted the economic downturn had made conditions tougher for small businesses but said they do not yet face a situation akin to the 1990s, when credit was all but choked off.

"The SEC has commenced a formal inquiry into market practices concerning research analysts and the potential conflicts that can arise from the relationship between research and investment banking," the SEC said in a statement, notable for its rarity.

The SEC's practice generally is to not confirm an investigation is under way.

"The recent disclosures that resulted from the investigation by the New York State Attorney General, as well as the practices uncovered by the staff of the SEC, the NYSE and NASD, reinforced the commission's conclusion that further inquiry is warranted," the SEC's statement said.

Pitt, the SEC chairman, called the probe "the next step -- and a critical one -- in the commission's year-long review of analyst practices," according to the statement.

The leading index has been posting strong gains, growing by 2.9 percent from September 2001 to March 2002, and by 2.2 percent for each of the six-month periods ending January and February 2002. The gains would have been more robust had it not been for the weakness in building permits and claims for unemployment insurance.
Gains in industrial production in the last three months, coupled with a recovery in employment, have helped push the coincident index up. Negative trends in these indicators were largely responsible for the decline in the coincident index last year.
US economic recovery appears to be underway. The combination of rising energy prices, the current global instability, and the more cautious consumer and business sectors, however, might slow the pace of economic growth in the near term.

Manufacturing and construction each lost nearly 40,000
jobs, but services employment grew substantially.
Both the manufacturing workweek and overtime hours rose over the month.

Companies posting better-than-expected results are U-S Airways, Sears, McDonald's, Mattel and Marriott

Gainers outnumber losers by about three-to-two on the New York Stock Exchange.
The Nasdaq Composite Index is up a fraction and the Standard-and-Poor's 500 Stock Index has added one poin
SAP Reports Earnings Down in First Quarter-Net profit at SAP, the world's largest supplier of business-management software, fell to 65 million euros ($57 million
Telecommunications stocks slumped after Nokia cut its sales growth forecast for 2002, but upbeat news from IBM helped restore some optimism to the market