Stocks mixed on oil and consumer data
NEW YORK » Wall Street ended mixed yesterday as concerns about the path of Hurricane Gustav sent oil prices higher and offset a better-than-expected reading on consumer confidence. Comments from the Federal Reserve about rising inflation added to the market's uneasiness.
The Fed's release of minutes from its Aug. 5 meeting showed that the central bank remains concerned about creeping inflation and that it expected it would need to raise interest rates to try to contain rising prices.
At that meeting, policymakers held rates steady because "American businesses and consumers were facing elevated borrowing costs and reduced credit availability." However, the Fed also said it was far from clear when a rate hike might come.
There was some optimism at the start of the day on the Street after the Conference Board said its consumer confidence index rose to 56.9 from a revised 51.9 in July; analysts had expected a reading of 53. That marked the second month in a row that sentiment improved, after a six-month slide since January.
The U.S. Commerce Department reported that new home sales rose 2.4 percent in July. While analysts expected a drop in sales, the July increase followed a sharp downward revision to June's sales.
A barrel of light, sweet crude ended the day up $1.16 to settle at $116.27 on the New York Mercantile Exchange.
The Dow Jones industrials rose 26.62, or 0.23 percent, to 11,412.87. The blue-chip index crossed in and out of positive territory throughout the session.
Broader indexes were mixed. The Standard & Poor's 500 index rose 4.67, or 0.37 percent, to 1,271.51; the Nasdaq composite fell 3.62, or 0.15 percent, to 2,361.97.
The Russell 2000 index of smaller companies rose 2.97, or 0.41 percent, to 723.51.
Advancing issues narrowly beat decliners by an 8-to-7 basis on the New York Stock Exchange, where volume consolidated came to an anemic 3.44 billion shares, compared to 3.37 billion shares on Monday.
Bonds were little changed. The yield on the benchmark 10-year Treasury note, which trades opposite its price, fell to 3.78 percent in late trading from 3.79 percent late Monday.
The dollar hit a six-month high against the euro and surged to a 25-month high against the pound, while gold prices advanced.
Yesterday, the Federal Deposit Insurance Corp. said 117 banks and thrifts are considered to be in trouble since the second quarter. That is up from 90 in the prior quarter, and the biggest tally in five years.
However, shares of Fannie Mae and Freddie Mac climbed for a second day amid growing expectations among some investors that the mortgage financiers will be able to weather the housing storm without a government rescue.
Fannie shares rose 43 cents, or 8.3 percent, to $5.62 in morning trading, while Freddie soared 69 cents, or 21 percent, to $3.98.