Prices rose 1/4 to 3/8 point after the Federal Reserve Board cut the discount rate to 5% Friday, clearing the way for more price gains and lower interest rates on this week's $4.2 billion new issue slate.

The market's anticipation paid off yesterday as the Fed finally moved to cut the discount rate after it was reported that retail sales plunged 0.7% to an adjusted $152.3 billion in August, the biggest monthly drop since January. The consumer price index for all urban consumers rose 0.2% in August, the same as the two preceding months.

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