Stocks Down in Advance of Fed Meeting
Wall Street stocks slipped Monday as many buyers sat out the session in anticipation of today’s Federal Reserve Board meeting to discuss an interest rate change, and against a backdrop of uncertainties in Asia and other emerging markets.
Microsoft sagged under the weight of federal and state antitrust lawsuits launched Monday, taking other technology stocks with it.
The Dow Jones industrial average closed down 45.09 points, or 0.5%, at 9,050.91, well above the day’s low of 8,972.20.
In the broad market, declining issues outpaced advancers 2,029 to 929 on light volume of more than 518 million shares on the New York Stock Exchange.
The Nasdaq composite index closed off 15.15 points, or 0.82%, at 1,831.62.
“The market is looking for reasons to be nervous ahead of the [Fed’s] Federal Open Market Committee tomorrow, even if the consensus is there should be no move on rates,” said Robert Froehlich, chief investment strategist at Scudder Kemper Investments.
“It’s tough to quantify ‘What does Asia mean?’ and tough to quantify ‘What does the Microsoft lawsuit mean?’ and so you tend to overreact,” Froehlich added.
“It’s the day before the Federal Reserve meets, and it’s dominating the thinking today,” Robert Stovall, president of Twenty-First Securities said. “There is enough doubt about what the Fed might do to keep investors holding off. Most are saying, ‘Why buy?’ and ‘Let’s wait.’ ”
Financial markets also were waiting to see if Indonesia’s President Suharto would resign amid the turmoil there.
Indonesia’s woes, coupled with talk of an interest rate hike in Russia, rippled through emerging markets, especially Brazil, where the Bovespa stock index fell more than 8% to levels not seen since the end of last year.
But Asia’s rekindled woes were expected to help keep the Fed on hold, analysts said.
Concern about the unrest in Indonesia helped push the dollar to its highest level against Japan’s yen since September 1991. The dollar closed at 136.25 yen in New York, up from 134.52 late Friday.
Bonds yields were mostly down. The yield on the key 30-year Treasury bond dipped to 5.92% from 5.97% at Friday’s close. The price, which moves in the opposite direction of the yield, climbed 66 cents, or $6.56 on a bond with a $1,000 face value.
On Wall Street, Microsoft fell $3.38 to $86.06 as the second-most active Nasdaq issue.
Netscape Communications, Microsoft’s rival in the browser market, closed off 69 cents at $27.25.
The Standard & Poor’s composite index of 500 stocks shed 2.91 points, or 0.26%, to end at 1,105.82. The American Stock Exchange index fell 4.73 points, or 0.64%, to 732.36.
The NYSE composite index of all listed common stocks was off 2.32 points, or 0.4%, to 572.08. The average share was off 19 cents.
Overseas, Tokyo’s Nikkei stock average rose 0.9%, Frankfurt’s DAX index fell 0.9%, and London’s FTSE-100 fell 1.5%.
* Dell Computer bucked the downward trend on Nasdaq to end up $4.50 at $94.50. Analysts expect Dell to post solid earnings after markets close Tuesday.
* Office Depot, which said it will buy Viking Office Products for $3 billion, fell $3.38 to $31.06. Viking ended up $5.88 at $29.81.
* Shares in Genentech, EntreMed, and Targeted Genetics rose sharply amid positive news about their experimental cancer drugs.
