All Quiet on the Investor Front Ahead of Fed Meeting
Stocks rose modestly Monday, but investors were reluctant to place any big bets before today’s Federal Reserve Board meeting on interest rate policy, making it the slowest day of the year on Wall Street.
The Dow Jones industrial average stumbled in the morning, threatening to extend Friday’s nearly 140-point slide, but steadily recovered and rose 34.21 points to 7,228.88. Broad-market indicators also turned positive.
However, more telling than the day’s slim gains was the unusual calm before the potential storm that could follow today’s Federal Open Market Committee meeting.
Analysts and investors remained divided over whether inflationary pressures seem threatening enough to merit another economy-slowing increase in interest rates by the central bank. But as the culmination of a two-month guessing game that has sent the markets sliding and soaring, Tuesday may actually prove anticlimactic.
“The Fed could play it either way, and either way it could produce a sign of relief,” said Robert Stovall, president of Stovall/Twenty-First Advisors. “There was a slight upward bias [Monday] because many people think there will be a positive reaction no matter what the Fed does.”
Advancing issues outnumbered decliners by nearly a 4-3 margin on the New York Stock Exchange, where volume totaled 345.14 million shares, only the second time this year that the tally didn’t exceed 400 million. The previous slowest day this year was April 21, when 393.65 million shares were traded.
The Standard & Poor’s 500-stock list rose 3.52 points to 833.27, and the NYSE composite index rose 1.70 points to 434.14. The Nasdaq composite index rose 0.51 point to 1,341.24.
Fed officials raised one of the central bank’s key lending rates in March, spurring a sharp sell-off in the financial markets amid fears that company profits might suffer if the Fed acts too aggressively in slowing the economy. The markets subsequently reversed course amid a stream of data suggesting the economy’s vigorous pace was slowing.
Business was also slow in the bond market Monday, with the price of the benchmark 30-year Treasury bond off slightly, raising its yield to 6.92% from 6.90% at Friday’s close.
Monday was the least active trading day this year, with only $38.9 billion of Treasury securities changing hands, according to GovPx, a bond-pricing service. That’s about 25% below average.
“In front of this major news, no one is taking big positions either way,” said Eric Cheung, who manages $2.8 billion of fixed-income investments at Wilmington Trust Corp. in Wilmington, Del.
Among Monday’s highlights:
* The Dow’s biggest gainers were consumer product concerns that enjoy fairly steady demand regardless of economic conditions. Walt Disney rose 2 3/8 to 83 1/4, Procter & Gamble rose 1 1/4 to 131 7/8, Coca-Cola rose 1 1/8 to 68 and Johnson & Johnson rose 1 to 61 1/4.
Meanwhile, the Dow’s weakest components were Boeing, down 1 1/2 to 97 1/4, and United Technologies, down 1 1/4 to 76 1/4. Both are economically sensitive issues that could suffer if the pace of business slows.
* Computer disk drive makers fell on concern that inventories could pile up. Seagate Technology dropped 3 1/2 to 45, Quantum lost 4 7/16 to 40 3/4 and Western Digital slid 4 1/4 to 61 3/4.
Other computer-related stocks were mixed after Hewlett-Packard, which reported disappointing earnings Friday, announced cuts in personal computer prices of as much as 13%. HP rose 1/8 to 52 7/8, Dell Computer rose 3 1/4 to 97 1/2, Compaq Computer fell 3/4 to 94 3/4 and Intel fell 3/8 to 154 3/4.
Westell Technologies rose 1/2 to 19 3/4 after Bell Atlantic announced a four-year contract with the maker of high-speed Internet access equipment and DSC Communications. DSC gained 1 9/16 to 24 3/16, while Westell rival PairGain Technologies slumped 1 3/4 to 15 1/2.
* Amoco and Mobil rose after reports--which neither company would confirm--that they plan to combine their refining and marketing businesses. Mobil rose 2 1/2 to 136 5/8 and Amoco gained 2 3/4 to 87 1/2.
* American Express rose 1 1/4 to 68 5/8 after signing 21-year-old golf star Tiger Woods as a spokesman for its financial services unit in a deal valued at $30 million over five years.
Elsewhere, Tokyo’s Nikkei stock average rose 0.8% and London’s FTSE-100 fell 1.0%. German financial markets were closed for a holiday.
Market Roundup, D12
