Stocks Are Mixed Ahead of Fed Meeting
Stocks crawled to a mixed close Monday in the year’s second-slowest session as Wall Street braced for today’s key meeting of the Federal Reserve Board’s interest-rate-setting committee.
Petroleum- and gold-related issues rose with oil and gold prices, but a slump in AT&T; depressed blue-chip indexes.
The Dow Jones industrial average rose 9.99 points to 5,699.44 after holding in a trading range of less than 19 points. The S&P; 500 was up 1.37 points to 666.58. The Nasdaq index was off 2.74 points at 1,130.91.
In the broader market, advancing issues led decliners by 1,225 to 1,030 on volume of 294 million shares on the New York Stock Exchange, the second-slowest turnover after 281.6 million shares on July 29.
“Everyone is sitting on the sidelines, seeing what the Fed will do,” said Harry Laubscher, analyst at Tucker Anthony.
The consensus among analysts is that the central bank’s Federal Open Market Committee will not raise short-term interest rates.
“I believe the Fed has concluded it will not do anything, and that’s contributing to the low volume,” said Robert Stovall at Stovall/Twenty-First.
A slight downside risk of the Fed meeting, however, was enough to pressure bonds, sending interest rates higher. The yield on the 30-year Treasury bond--a key determinant of corporate and consumer borrowing costs--rose to 6.79% from Friday’s 6.76%.
Among Monday’s highlights:
* One of the strongest sectors was oil stocks, helped by strong gains in oil prices. On the New York Mercantile Exchange, September crude oil rose 60 cents to $23.26 a barrel, the highest price since mid-April.
Texaco rose 1 3/8 to 89 1/8, Exxon added 1 1/8 to 83 1/2, Amoco rose 1 to 70 1/2 and Mobil gained 3/4 to 114 1/4.
* Airline stocks racked up impressive gains after the carriers, led by Continental, said they were raising domestic air fares by at least 10%.
Continental gained 1 to 23 1/4; Northwest rose 1 1/2 to 37; AMR, the parent of American Airlines, gained 5/8 to 84; and UAL, the parent of United, was up 1/2 to 49.
* On New York’s Commodity Exchange, the active December gold contract closed up $1 at $392.40 an ounce, helping guide gold shares higher. Newmont Mining rose 2 to 52 7/8, Placer Dome gained 5/8 to 24 3/8 and Barrick Gold was up 3/4 to 27 3/8.
* AT&T; shed 1 3/8 to 54 1/8 after announcing that Chief Operating Officer Alex Mandl was resigning to head a new venture company called Associated Communications, a unit of Associated Group. Mandl had been seen as a successor to AT&T; Chairman Robert Allen. Associated Group’s Class A shares gained 4 3/4 to 30 1/4.
* Netscape Communications announced a version of its Internet browser software that is seen as a rival to Microsoft’s product. Investors were unimpressed, with Netscape shares off about 2 3/8 to 36 1/2 and Microsoft down 3/4 to 123 1/2.
* Harnischfeger Industries rose 1 3/8 to 37 3/4, extending Friday’s advance. The heavy-machinery firm reported earnings higher than forecast.
* Gambling stocks were big losers. Harrah’s Entertainment dropped 2 5/8 to 18 1/8 after Salomon Bros. downgraded the stock and reduced its earnings estimates for the company.
* PepsiCo slumped 1 to 30 1/2 and was the second-most-active stock in the country after its Venezuelan bottler switched to Coke.
Overseas, Tokyo’s Nikkei stock average rose 1.3%, Frankfurt’s DAX index was up 0.6%, and London’s FTSE-100 fell 0.2%.
