Stocks ease as traders await Fed
Stocks closed mostly lower Wednesday, unable to sustain the momentum of the rally a day earlier.
In other trading, the dollar continued to slide, hitting a fresh record low against the euro.
On Wall Street, some investors may have turned cautious as oil prices crossed $80 a barrel for the first time.
Also, Texas Instruments weighed on the technology sector after the chip maker was less upbeat about quarterly sales and earnings than some investors had hoped.
The Dow Jones industrial average slipped 16.74 points, or 0.1%, to 13,291.65, after trading in a narrow range all day.
The Standard & Poor’s 500 added 0.07 of a point to 1,471.56. The Nasdaq composite eased 5.40 points, or 0.2%, to 2,592.07.
Falling stocks outnumbered winners by about 5 to 4 on the New York Stock Exchange and more than 4 to 3 on Nasdaq.
The Dow jumped 180 points Tuesday, helped by optimism that the Federal Reserve will trim its benchmark short-term rate, now 5.25%, when policymakers meet next week.
But many analysts have expected the market to go into a lull this week, awaiting the Fed.
“I think the big issue is the debate over Federal Reserve policy, so, to some extent, the market is waiting it out,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, N.Y.
Expectations of a Fed rate cut have surged in recent weeks amid the turmoil in credit markets, with investors worldwide turning risk-averse. Also, the government said Friday that the economy lost a net 4,000 jobs in August, suggesting that the U.S. could slow to the point of tipping into recession.
“Everyone’s talking about the economy slowing,” said Dan Genter, who helps manage $2.7 billion as president of RNC Genter Capital Management in Los Angeles.
Rising oil prices could put more pressure on the economy. Near-term crude futures jumped $1.68 to a record $79.91 a barrel Wednesday, and traded as high as $80.18, on continuing concerns about tight supplies.
In currency markets the euro rose to a record high of $1.391 from $1.383 on Tuesday.
In recent weeks the dollar has renewed its decline against key rivals as a Fed rate cut has looked more certain. Lower U.S. interest rates could make dollar-denominated fixed-income investments less attractive to foreign investors, reducing demand for dollars.
“It’s all about lower-growth, lower-rate expectations now,” said Gregory Salvaggio, senior currency trader at Tempus Consulting in Washington.
“That combination is fueling a shift to the euro, especially ahead of the Fed’s meeting next week, and now that we broke $1.39, the next one at $1.40 is within sight.”
The Canadian dollar rose to 96.5 U.S. cents from 95.9 cents on Tuesday.
A weaker dollar can help U.S. exporters by making their products less expensive abroad. But a falling buck also reduces Americans’ purchasing power abroad.
In the Treasury bond market, the 10-year T-note yield edged up to 4.41% from 4.37%.
Among the day’s market highlights:
* Texas Instruments lost 60 cents to $35.12 after saying sales this quarter would be as high as $3.72 billion, slightly below the most optimistic number the company had given previously.
Also in the chip sector, Intel dipped 20 cents to $25.46 and Broadcom slipped 9 cents to $35.37.
* Depressed home builders’ stocks slid further. KB Home lost 29 cents to $26.26, Standard Pacific was down 56 cents to $7.86 and Beazer Homes dropped 38 cents to $8.85.
* McDonald’s dipped 56 cents to $51.20 in regular trading, then jumped to $52.68 after hours, after it announced that it was raising its annual dividend by 50%, from $1 a share to $1.50.
Microsoft, which was unchanged at $28.93, also announced a dividend increase after regular trading ended. The company said its quarterly dividend would rise to 11 cents a share from 10 cents.
* Energy stocks rallied with crude prices. ConocoPhillips gained $1.32 to $84.85 and Marathon Oil added $1.09 to $53.97.
* Thousand Oaks-based Amgen climbed $1.76 to $55.64 after analysts at Merrill Lynch & Co. and UBS upgraded the world’s largest biotechnology company after a regulatory panel recommended against curbing use of its anemia drugs.
* Manhattan Beach-based footwear maker Skechers surged $1.67 to $20.81 after BB&T; Capital Markets raised its rating on the stock to “buy” from “hold,” saying the company was winning market share from rivals.
