Profit-taking erodes
Wall Street’s gains

NEW YORK >> Wall Street gave up a substantial early gain and staggered to a mixed finish yesterday after a Federal Reserve official warned that interest rates might continue to climb.

The Dow Jones industrials had surged more than 111 points before Federal Reserve Bank of Atlanta President Jack Guynn said in a speech that the Fed's Open Market Committee was not yet ready to stop its policy of modest rate hikes. Guynn's comments set off profit-taking that left the Dow with a minimal gain and the Standard & Poor's 500 and Nasdaq composite indexes with slight losses.

It was an earlier, bullish assessment of the economy from Fed Chairman Alan Greenspan, given in a speech broadcast at a meeting of central bankers in Beijing late Monday, that triggered the initial advance. Greenspan said the economy would remain strong and intimated that the Fed could soon stop raising interest rates, at least for the short term.

With seemingly dueling comments from the Fed committee members, investors remained confused as to whether the economy was headed for a harsh slowdown and whether the Fed would continue raising interest rates through the summer.

"The cross currents here are nothing like I've ever seen," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "There's a lot of confusion and uncertainty over everything -- the dollar, interest rates, oil, all sorts of things."

The Dow rose 16.04, or 0.15 percent, to 10,483.07.

The Nasdaq, which had been up more than 1 percent, lost 8.60, or 0.41 percent, to 2,067.16, while the S&P 500 fell 0.25, or 0.02 percent, to 1,197.26.

The bond market moved higher as the stock market began to sell off. The yield on the 10-year Treasury note fell to 3.90 percent from 3.95 percent late Monday. The dollar rose against the euro but fell against the Japanese yen, while gold prices moved higher.

Oil prices slid for a second straight session, with a barrel of light crude quoted at $53.76, down 73 cents, on the New York Mercantile Exchange.

Despite the lower oil prices and Greenspan's remarks, analysts said there wasn't enough fundamental strength -- or trading volume -- to support the early gain even before Guynn's remarks.

"We had a nice rally this morning off of Greenspan's comments, but we were really just up on fluff," said Todd Leone, managing director of equity trading at SG Cowen Securities. "There's not a lot of money flowing into the market, and when we hit the top of our range, we just bounced off it."