Stocks Finish Flat Amid Doubts
Stocks were little changed Monday as lingering doubts about the timing of an economic recovery dampened investor enthusiasm and another big bankruptcy weighed on the market.
Analysts said the market was waiting for the two-day meeting of the Federal Reserve’s Open Market Committee, which begins today. Although the committee is not expected to reduce interest rates again, traders want to see what predictions the Fed makes about an economic turnaround.
The Dow Jones industrial average closed up 25.67 points, or 0.3%, at 9,865.75, recovering from a drop of as much as 41 points.
The broader market was mixed. The technology-dominated Nasdaq composite index rose 6.21 points, or 0.3%, to 1,943.91, while the Standard & Poor’s 500 index slipped 0.2 point, nearly unchanged, to 1,133.06.
Winners led losers 13 to 12 on Nasdaq, and were about even on the New York Stock Exchange in moderate trading.
Though Fed Chairman Alan Greenspan indicated last week that the economy appears to be strengthening, traders will be scrutinizing the situation report the Fed is expected to release when its meeting concludes on Wednesday. Even in the absence of a rate cut, investors hope the central bank will be able to provide more concrete information about when a recovery will come, and which sectors will turn around first.
Stocks reversed direction several times during Monday’s session, continuing the meandering trend that has been in place for much of January. A string of murky corporate forecasts has given investors little sense of when business will improve, and therefore little reason to buy.
Citigroup and J.P. Morgan Chase dropped after Global Crossing filed for bankruptcy protection. Last month, Global Crossing secured a waiver with a group of banks led by J.P. Morgan and Citibank for $2.25 billion in loans.
Citigroup slid 31 cents to $49.31 and J.P. Morgan fell 68 cents to $34.31, its lowest level since October. Global Crossing has lost more than 99% of its value in the last year and is the fourth-biggest bankruptcy in U.S. history. Enron, which filed for Chapter 11 on Dec. 2, ranks as the largest. Kmart, the second-largest discount retailer, sought protection from creditors last Tuesday.
American Express stumbled 70 cents to $36.29 after reporting its fourth-quarter net income tumbled 56% and that it remains cautious about improvement in 2002.
Technology stocks were mixed. IBM fell $1.13 to $108.15, while Cisco Systems advanced 57 cents to $19.70.
In economic news, the Commerce Department reported new home sales rose 5.7% in December. The gain was helped by the Federal Reserve’s 11 interest rate cuts in 2001.
In other market highlights:
* The automobile sector got a boost after Morgan Stanley raised its investment rating on the sector. It also increased individual ratings on auto makers General Motors and Ford, saying the stocks are cheap, given resilient car demand and lower inventories. Ford rose 45 cents to $15.06, while GM climbed $1.86 to $50.34.
* Texas Instruments rose 95 cents to $28.40 in anticipation of earnings due out after the market closed. Those results beat Wall Street’s expectations, and the stock rose as high as $30.05 in after-hours trading.
* Xerox climbed $1.34 to $11.24 after the office equipment maker reported a surprise profit, before unusual items, for the 2001 fourth quarter. Xerox said it was confident of a profit for 2002.
Veritas Software jumped $1.43 to $46.65 after an ABN-Amro analyst said the company will benefit from increased sales for data backup and recovery products.
*
Market Roundup: C10, C11.
