Stocks little changed ahead of Fed meeting
NEW YORK » Wall Street finished little changed yesterday as investors turned cautious ahead of the Federal Reserve's two-day policy meeting, which starts today.
Stocks advanced for most of the session, then pulled back modestly in the final minutes of trading.
Investors' appeared to be waiting for the Fed to make the next move. Policymakers are widely expected to cut interest rates by a quarter point on Wednesday, then leave them steady for the balance of the year to help ward off inflation.
The session's modest moves came despite one of the most active days for acquisitions in almost three months. The biggest deal was the Warren Buffett and candy maker Mars Inc. offer to buy Wm. Wrigley Jr. Co. for about $23 billion in cash. Meanwhile, billionaire Kirk Kerkorian plans to make an offer that would expand his stake in Ford Motor Co. to 5.6 percent, saying he sees signs the automaker's turn-around plan is working.
This helped to offset disappointment in the market that struggling Continental Airlines Inc. said it would not pursue a combination with another carrier right away. It was a surprising move after weeks of speculation it would join with United Airlines to create the world's biggest carrier.
Some observers saw the dealmaking as an encouraging sign that companies are still willing to make mergers and acquisitions happen -- and that many might do so while valuations still look cheap.
"Investors are holding their breath for the Fed, and not even these high-profile deals are shaking people off of their hands," said Jack A. Ablin, chief investment officer at Harris Private Bank. "The direction of Fed policy hangs in the balance, and there are people like me that hope the central bank quits sooner rather then later."
The Dow Jones industrial average fell 20.11, or 0.16 percent, to 12,871.75.
Broader indexes were mixed. The Standard & Poor's 500 index slipped 1.47, or 0.11 percent, to 1,396.37, and the Nasdaq composite index rose 1.47, or 0.06 percent, to 2,424.40. The Russell 2000 index of smaller companies advanced 3.49, or 0.48 percent, to 725.37.
Advancing issued outpaced decliners by about a 3-to-2 margin on the New York Stock Exchange, where volume came to 1.21 billion shares compared with 1.45 billion shares traded Friday.
Bond prices edged higher after suffering big losses last week. The yield on the benchmark 10-year Treasury note fell to 3.82 percent from 3.87 percent late Friday.
Crude spiked to near $120 a barrel in overnight trading amid supply concerns, then gave up some gains to settle up 23 cents at $118.75 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, while gold prices were higher.
In corporate news, Kerkorian's investment company, Tracinda Corp., said it plans to offer $8.50 per share in cash for up to 20 million additional shares of Ford. Ford rose 9.5 percent, to $8.21.
Continental Airlines shares fell 26 cents to $16.96 after the airline announced it wasn't interested in completing a deal. The decision stunned United's parent, UAL Corp., which had been in advanced talks with Continental and expected to complete a deal by early May. United shares fell 2.6 percent, to $14.81.