Markets Quiet as Investors Await Fed’s Rate Decision
It doesn’t get much duller than Monday’s session on Wall Street.
Stock prices and bond yields closed little changed as investors awaited today’s meeting of Federal Reserve policy makers.
The Dow Jones industrials eased 8.57 points to 10,760.75, while the Nasdaq composite--which over the last three weeks had rocketed 404 points to a record 3,221.15 by Friday--slipped 1.61 points to 3,219.54.
Trading volume was active, and there were pockets of strength in the stock market, notably among smaller issues.
But the looming Fed meeting clearly kept many people sidelined.
In the bond market yields were unchanged nearly across the board, with the 30-year Treasury bond yield holding at 6.03%, same as Friday’s seven-week low.
With economists split on whether the Fed will raise short-term interest rates for a third time this year, there also is disagreement over how markets would react either way.
Some analysts say bond yields could rise if the Fed holds steady, because bond investors would fear that inflation might get the upper hand sooner than later.
A rate increase, meanwhile, might not be received badly by the stock market--if the Fed also makes a statement that it may be finished raising rates for now, some experts say.
In Europe on Monday, equity investors showed little fear of the Fed: Markets there rallied strongly, with the main German share index up 1.2%, the main Dutch index up 1.7% and Italy’s key index up 0.9%.
Mexican stocks also advanced, pushing the IPC index up 1.3%.
Among Monday’s U.S. market highlights:
* Buyers turned back to some classic cyclical industrial stocks, in an apparent vote of confidence in the economy’s continuing growth.
Lumber and paper firm Weyerhaeuser jumped $2.06 to $63.13, Dow Chemical gained $3.56 to $122.13, Alcoa rose $1.63 to $63.94 and machinery firm Briggs & Stratton gained $4.25 to $57.88.
* Tech stock leaders of recent weeks pulled back. Apple fell $1.19 to $89.44, Qualcomm slid $10 to $368 and Oracle fell $1.06 to $64.06.
Microsoft resumed its slide, down $2.19 to $87.
* The Internet sector was mixed. Ticketmaster Online surged $8.06 to $30.31, Yahoo leaped $8.06 to $205 and EarthWeb jumped $11 to $42.69, but EToys fell $2.38 to $51.06 and DoubleClick slid $11.06 to $156.
* Many energy-services stocks gained as crude oil prices rose to multi-year highs. Baker Hughes gained $1.50 to $27.50 and Halliburton rose $1.31 to $43.
* In the telecom sector, Oak Industries soared $19 to $68.75 after Corning agreed to acquire it for $1.8 billion. Oak makes devices that are used as timing references in wireless and fiber-optic applications. Corning fell $3.63 to $86.75.
Also, telecom services firm Global Crossing surged $4.31 to $42.81 after saying it will form a $1.2-billion venture with Hutchison Whampoa to offer Internet-related services in Hong Kong and later in mainland China.
* Toys R Us jumped $1.75 to $18.25 after posting third-quarter operating net income of 13 cents a share, beating analysts’ consensus estimate by 4 cents.
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Market Roundup, C13
