FINANCIAL MARKETS : Fed Decision Barely Ruffles Dull Session
The stock market reaped scattered gains Tuesday while Wall Street registered little reaction to news that federal policy makers refrained from lowering interest rates.
Renewed vigor in semiconductor issues was almost the only noteworthy development during an otherwise dull session.
Most of the popular market indicators never strayed far from their starting points. The Dow Jones industrial average finished up 5.64 points at 4,620.42.
Losers nosed out gainers by 11 to 10 on the New York Stock Exchange where volume came to 290.36 million shares as of 4 p.m. EDT, down from 303.19 million Monday.
The NYSE composite index crawled ahead 0.25 point to 300.16 and Standard & Poor’s 500 list logged an increase of 1.41 point to close at 559.52. The American Stock Exchange market value index inched up 0.18 point to 528.39.
Thanks to strength in selected technology stocks, especially shares of computer chip makers, the Nasdaq Stock Market composite index chalked up a solid advance of 5.59 point and closed at 1,025.29.
Stocks kept within a narrow range while investors awaited the outcome of the Federal Open Market Committee meeting. When the Fed’s policy arm, known as the FOMC, concluded its session at midafternoon without announcing any rate changes, as expected, stocks barely budged.
“I think that we’re just seeing a continuation of the summertime blahs that began last month after the initial whack against technology stocks,” said James Solloway, director of research at Argus Research Corp. “We’re seeing a market that has simply lost its forward momentum after a very strong rise in the first half of the year. This is nothing to get excited about.”
Lackluster trading in the bond market provided no direction for equities. Prices of Treasury notes and bonds barely moved for much of the day and trended slightly lower after the Fed meeting finished.
The yield of the Treasury’s main 30-year bond rose to 6.89% from 6.87% on Monday.
The dollar ended higher against the German mark after currency traders shrugged off the Fed’s decision and concentrated on the prospect for lower rates in Germany.
“Although people were watching the Fed meeting closely, not too many people expected them to cut rates,” said John McCarthy, manager of foreign exchange for ING Capital Markets in New York.
“People are focused on Germany because the scenario is in place for a rate cut and whether it comes now or later, people believe it is coming,” he said.
Lower rates in Germany could reduce the attractiveness of mark-based assets and undermine the value of the currency.
In late New York trading, the dollar was higher at 1.4870 German marks, up from Monday’s 1.4767 German marks.
Meanwhile, the dollar was at 96.85 Japanese yen, slightly lower than 96.87 yen on Monday.
Among Tuesday’s highlights:
* Active Big Board stocks included Micron Technology, up 4 3/8 to 72 3/8, Texas Instruments, up 2 3/4 to 76 1/2, Motorola, up 1 1/2 to 75 1/2 and National Semiconductor, up 1 5/8 to 28 3/4.
* Upjohn Co. topped the NYSE actives list and rose 2 to 43 after analysts upgraded the stock following its planned merger with Pharmacia AB.
* Among initial public offerings, Harbinger Corp., an Internet-related software maker, rose 3 1/8 to 15 1/8.
Despite the rebound in technology stocks, Peter Anderson, chief investment officer of American Express’ IDS Advisory Group Inc., said they are pointing to a market-wide correction during which the major indicators will retreat.
“The turning point for technology stocks is coming right now. Slowly but surely the steam is going out of this very powerful sector of the market,” he said. “They are losing their upward momentum.”
In commodities trading, oil prices jumped as a steep drop in crude inventories pulled nationwide supplies to the lowest level in 16 years.
The Commodity Research Bureau index of 21 commodities, which hit a 4 1/2-year high Monday, retreated 0.48 to 239.44, hurt by weaker grain, lumber and metals prices. Coffee prices rose on worries over weather in Brazil, the world’s largest producer.
Crude oil prices hit their highest level in more than two months, continuing a month-long rally, on the low domestic supplies and instability in the Mideast caused by tensions with Iraq.
September oil jumped 29 cents to close at $18.54 a barrel at the New York Mercantile Exchange as the contract expired.
Overseas stock action offered nothing to inspire Wall Street.
In Tokyo, stock prices closed mixed as movements in the yen-dollar rates in the last few sessions confined the key indexes to a small range. The Nikkei-225-index rose 6.72 points, or 0.04%, to 17,877.77.
In London, the FTSE 100-share index finished 5.5 points down at 3,530.2.
In Mexico, the Bolsa index closed 4.45 points higher, a gain of 0.18%, at 2,489.55.
