Stocks Stagnant Ahead of Fed Move
Stocks were unable to hold on to modest early gains Monday, and key indexes closed little changed ahead of today’s Federal Reserve meeting.
Trading was thin as many investors stayed on the sidelines after last week’s steep losses and as crude oil rose to another record high.
In other markets, Treasury bond yields rose, while gold and the dollar barely budged.
Some analysts were surprised that the stock market didn’t fare much worse, given the latest surge in oil. Near-term futures in New York jumped 89 cents to $44.84 a barrel.
The Dow Jones industrial average, up 43 points early in the day, closed off 0.67 point at 9,814.66.
The Nasdaq composite fell 2.25 points to 1,774.64. The Standard & Poor’s 500 eked out a gain of 1.25 points to 1,065.22.
Falling stocks outnumbered winners by 3 to 2 on Nasdaq and by a slimmer margin on the New York Stock Exchange.
The market had been clobbered last week by worries about the economy, terrorism warnings and oil’s continuing climb.
The Dow fell 3.2% for the week, including a 147-point loss Friday after the government said the economy created a net 32,000 jobs in July, far below what was expected.
Some bargain hunters were picking over the market early Monday, with many stocks at their lowest prices since late last year, analysts said.
But many investors were reluctant to make a move ahead of the Fed’s meeting.
Policymakers are expected to raise their benchmark short-term interest rate to 1.5% today from 1.25%, in the second increase since June 30.
Most analysts believe that Fed officials, in raising rates, will affirm their recent statements that the economy remains on a solid growth track.
But Wall Street also was waiting to see what the Fed might say, in its official statement, about the chances of additional rate increases this fall.
“We’re going to look very carefully at what the Fed has to say,” said Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston.
There is widespread disagreement over whether the economy is in a sustained slowdown or is merely pausing.
“There is no question that job growth is weak, but that doesn’t mean the economy is weak,” David Jordan, who oversees $1.1 billion as chief investment officer at First National Bank in Fort Collins, Colo., told Bloomberg News.
Among the day’s market highlights:
* Treasury bond yields, which had plunged Friday to their lowest levels since spring after the July employment report, moved higher.
The 10-year T-note ended at 4.26%, up from 4.22% on Friday.
The government’s auction of $22 billion in new three-year notes met with tepid demand. The yield was 2.84%. The Treasury will sell new five-year notes Wednesday and 10-year notes Thursday.
* Gold added 90 cents to $400.70 an ounce in New York. It surged $7.50 an ounce Friday as the dollar tumbled after the employment report, but the dollar stabilized Monday.
* Energy stocks rallied with oil prices. Unocal rose $1.09 to $35.80, Burlington Resources gained $1.59 to $36.73, and Exxon Mobil was up 44 cents to $45.56.
* Airline shares weakened further as oil rose. AMR, parent of American, lost 37 cents to $7.17, and Northwest fell 29 cents to $7.53.
* Retail stocks were modestly higher. Nordstrom added 70 cents to $40.65, and American Eagle Outfitters was up 95 cents to $31.78.
* Some bargain hunters sought out industrial shares. Black & Decker rallied $1.18 to $66.74, Deere rose 78 cents to $58.38, and Nucor gained $1.57 to $79.31.
* In the battered Internet sector, Yahoo fell 32 cents to $25.70, and TravelZoo slid $2.72 to $23.58. But EarthLink was up 21 cents to $9.02.
* Semiconductor stocks, another sector that has been hit hard over the last month, were mixed. Intel dipped 20 cents to $22.57, and Motorola lost 2 cents to $14.72, while Broadcom gained 58 cents to $32.50.
* Utility stocks pulled back after rallying Friday while most other stocks fell. The Dow Jones utility index fell 1.96 points, or 0.7%, to 282.43.
