Stocks End Mixed Before Fed Meeting
Stocks finished a lackluster session narrowly mixed Monday as investors made few moves ahead of today’s Federal Reserve decision on interest rates.
Energy stocks soared as oil prices rose and as Exxon Mobil reported record profit.
The Commerce Department’s latest report on consumer spending provided more evidence that the economy is on solid footing. Spending rose 0.9% in December, suggesting continued confidence in the economy despite high energy prices.
The report showed prices remaining in check -- good news for investors concerned about inflation. Despite that, many investors held off on major moves before today’s Fed meeting.
The central bank is expected to raise its benchmark short-term interest rate a quarter percentage point to 4.5%. Many economists also expect policymakers to reiterate that they may be nearly finished tightening credit.
For the market, “it’s really a question of the economy and what the Fed’s going to do, and that’s not something you’re going to see a big move on in a single day,” said Bill Groenveld, head trader for VFinance Investments.
After surging nearly 98 points on Friday on optimism about the economy, the Dow Jones industrial average eased 7.29 points, or 0.1%, to 10,899.92.
Broader stock indicators were mixed. The Standard & Poor’s 500 index added 1.48 points, or 0.1%, to 1,285.20, and the Nasdaq composite gained 2.55 points, or 0.1%, to 2,306.78.
Declining issues barely outnumbered advancers on the New York Stock Exchange.
The Russell 2,000 index of smaller stocks slipped 1.35 points, or 0.2%, to 730.87, after reaching a record high on Friday.
The S&P; 500 is up 3% this month, heading for its best January since 2001. The Dow average has gained 1.7%, on track for its best January since 1999, and the Nasdaq has rallied 4.6%.
In the bond market, Treasury yields on Monday continued their recent upward trend.
The 10-year T-note reached the highest level in seven weeks on the consumer spending report. The T-note yield rose to 4.53% from 4.51% on Friday. Bond yields rise as their prices fall. The two-year T-note ended at 4.51%, up from 4.49% on Friday and the highest since 2001.
Oil prices rose even after a top Saudi Arabian official said his country had no plans to cut production, and that prices were too high. The Organization of the Petroleum Exporting Countries meets in Vienna today.
A barrel of light crude settled at $68.35, up 59 cents, in New York trading. That matched the level on Jan. 20, which was the highest since Sept. 1.
Also in commodity markets, near-term gold futures gained $7.10 to $565.80 an ounce, a new 25-year high.
“Certainly, part of the [stock] market’s worries right now stem from oil,” said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. “You still have instability in the Middle East, and there’s a fear that prices will move dramatically higher.”
And while higher oil prices failed to dramatically harm economic growth last year, there’s a concern that more price hikes could either slow the economy or spark inflation.
In other market highlights:
* Exxon Mobil rose $1.82, to $63.11, after saying fourth-quarter net income climbed to $1.71 a share, capping the most profitable year for any company in U.S. history. Also in the energy sector, Valero Energy surged $3.15 to $63.20 and Baker Hughes gained $2.97 to $77.40.
* Schering-Plough dropped after quarterly sales fell short of expectations. The stock retreated 51 cents to $19.57. The developer of Claritin and Clarinex allergy drugs said fourth-quarter revenue was $2.32 billion, less than the $2.39 billion expected on average by analysts.
An S&P; 500 measure of healthcare shares lost 0.5%. Merck, which is fighting lawsuits over its Vioxx painkiller, fell 24 cents to $34.46. It is scheduled to report earnings today.
* Tyson Foods sank $1.10 to $14.27 after the world’s No. 1 meat processor cut its 2006 forecast and said fiscal first-quarter profit fell to 11 cents a share from 14 cents a year earlier. Profit this year will be 50 cents to 80 cents a share, down from a November forecast of at least 95 cents.
* Eastman Kodak fell 62 cents to $25.75. The company said it had a fourth-quarter loss of 18 cents a share, its fifth straight unprofitable quarter.
* Google, the most-used Internet search engine, slumped $6.67 to $426.82 before its earnings report today.
* Wal-Mart Stores rose after reporting January sales that suggested consumers continued to spend at the start of 2006. The world’s No. 1 retailer had its biggest January increase in two years. Same-store sales rose 4.7%, at the high end of the company’s previous forecast of 3% to 5%. Wal-Mart shares rallied 57 cents to $46.41.
