FINANCIAL MARKETS : Investors Mark Time Prior to Fed Meeting
Stocks closed mixed Monday as profit taking in technology issues dragged the broader market lower while sparing blue chips. The dollar recovered from most of Friday’s losses.
Uncertainty about interest rates on the eve of a Federal Reserve Board policy meeting hung over the markets.
“It was a tough day to get anything cooking,” said Joseph Barthel, chief investment strategist at Fahnestock & Co., who said investors were anxious about today’s Fed meeting.
Wall Streeters reckoned that with the economy picking up speed and inflation under control, the central bank has no reason to fiddle with short-term rates this week.
Trading on Wall Street fell during observance of the Jewish New Year. Volume on the New York Stock Exchange totaled 273.12 million shares, down from Friday’s 370.79 million.
Blue chips managed to finish positively after the Dow Jones industrial average bounced back from about a 20-point decline. It rose 5.78 points to 4,769.93.
But losers beat gainers by about 13 to 9 on the Big Board and most measures of market activity made minor moves. The NYSE composite index slipped 0.12 point to 311.76 and Standard & Poor’s 500 edged up 0.08 point to 581.81. The American Stock Exchange market value index skidded 3.52 points to 544.38.
Heavy selling in technology stocks hurt the Nasdaq Stock Market, which lists numerous computer and related issues. Worries about the profitability of certain bellwether companies bedeviled the technology sector. The Nasdaq composite index lost 7.24 points to 1,046.15.
Market analysts said the urge to sell tech stocks and collect profits amassed during a stunning rise in the sector this year probably has yet to be satisfied.
“I would think that this continued profit taking in the high-techs will weigh on the broader market for some time,” said Alfred E. Goldman, a vice president at A.G. Edwards & Sons in St Louis. “Other than that, the general market looks like it’s in a time out, a normal period of R and R.”
The Federal Open Market Committee, the central bank’s policy arm, meets today in Washington and is expected to review recent economic data before deciding whether another rate cut is needed to spur growth.
With that in mind, bond traders reacted negatively to a strong housing report in early trading before reversing course in the afternoon. The National Assn. of Realtors said sales of previously owned homes rose 3% in August to the highest level in 15 months. Bonds ended the day almost unchanged.
The dollar strengthened against the German mark, although it did not regain much of the ground it lost last week.
Dealers said concern about the future of economic and monetary union in Europe may prompt further flight to the mark, viewed as a safe-haven currency in Europe. That could weigh on the dollar, as would a rate cut by the Fed.
In late New York trading, the dollar managed to edge above the psychological level of 100 Japanese yen to 100.47, up from 99.65 on Friday. It was at 1.4320 German marks from 1.4230 on Friday.
Among market highlights:
* Merger news generated some interest. Potomac Electric Power rose 1 3/4 to 23 1/4 in heavy NYSE volume following news that the utility will be bought by Baltimore Gas & Electric, which fell 1 to 25 1/8.
Brooklyn Bancorp jumped 2 to 38 7/8 after it was disclosed that Republic New York will buy the banking company.
* Losers among the technology stocks included several high-profile computer chip makers. Micron Technology was the Big Board’s volume leader, slumping 3 3/4 to 82.
* Dow index components Caterpillar fell 7/8 to 58 and Alcoa was off 1 1/4 to 51 7/8.
Western Digital fell 2 1/8 to 16 after it said its first-quarter earnings would disappoint Wall Street. In Tokyo, the Nikkei-225 stock index fell 147.50 points, or 0.83%, closing at 17,566.43. The average has now fallen 907.95 points, including Friday’s 320.86-point drop, in four trading days.
Coffee prices plummeted to 16-month lows after rains soaked Brazil’s coffee-growing regions, eliminating the chances of a repeat of last year’s drought.
