Stocks tread water before Fed meeting
NEW YORK » Stocks advanced yesterday in light trading as Wall Street recovered from the previous session's selloff and awaited today's expected interest rate hike from the Federal Reserve.
Traders were still nervous after the Dow Jones industrial average lost more than 120 points Tuesday on a selloff fueled by worries about the Fed's pending interest rate decision and its accompanying policy statement. The Fed is expected to announce at least a quarter-point rate hike, which would bring short-term interest rates to 5.25 percent, but a few economists expect a bolder half-point increase. Any increase would be the 17th consecutive rate hike since the Fed began to tighten credit in 2004.
There was little corporate or economic news to guide traders. J. Crew's initial public offering at a higher-than-expected price and its subsequent run-up provided a scrap of cheer. The preppy retailer's offering was the third largest retail IPO of all time.
Stocks have barely budged for the year despite an early run-up and, more recently, a nearly two-month slide.
"If you're a long-term investor, I don't think there's been anything interesting to talk about in 2006; if you're a short-term trader, it's been painful," said Stephen Wood, portfolio strategist at Russell Investment Group.
The Dow rose 48.82, or 0.45 percent to 10,973.56. The Dow plunged 120.54 Tuesday.
Broader stock indicators also closed higher. The Standard & Poor's 500 index was up 6.80, or 0.55 percent, at 1,246.00, and the Nasdaq composite index rose 11.59, or 0.55 percent, to 2,111.84.
Advancing issues led decliners by roughly 9 to 7 on the New York Stock Exchange. Volume has been declining over the last week and a half as traders waited for the Fed's next move.
Stocks are still struggling following a selloff in May and early June. The tendency has been for strong opens to be followed by late-day selloffs, or weak opens to build into buying sprees.
Bonds fell, with the yield on the 10-year Treasury note rising to 5.25 percent, up from 5.22 percent Tuesday. The U.S. dollar was mixed against other major currencies. Gold prices fell.
Energy was the strongest sector of the day, as shares of Exxon Mobil Corp., Chevron Corp. and ConocoPhillips advanced after U.S. Energy Secretary Samuel Bodman said he had authorized crude oil loans from the nation's Strategic Petroleum Reserve to two Louisiana refineries that had been forced to curtail production because of a waterway blockage.