Star-Bulletin news services
Stocks trade lightly
ahead of Fed move
NEW YORK >> Investors made few moves yesterday ahead of a decision on interest rates, pushing blue chips moderately higher and tech stocks narrowly lower in a lightly traded session.
A mixed batch of economic news, amounting to a sales warning from Advanced Micro Devices and a better-than-expected reading on consumer confidence, added to the market's wait-and-see approach.
Investors were anticipating that the Federal Reserve's Open Market Committee today would once again lower rates to stimulate the economy. Analysts say that expectation has already been factored into the market's rallies over the past few weeks and that investors at this point are more concerned with what the Fed has to say about the economy's health and its prospects.
"What are significant are the Fed's comments ... about what they say they see as far as economic growth and the risk of deflation," said Brian Bush, director of equity research at Stephens Inc. in Little Rock, Ark. "Since the Fed brought up the risk of deflation in their last meeting, I think investors will want to see their assessment as to how real that perceived risk is."
The Dow Jones industrial average closed up 36.90, or 0.4 percent, at 9,109.85, wiping out more than a quarter of Monday's 127.80-point, profit taking loss.
The market's broader gauges were mixed. The Nasdaq composite index fell 5.14, or 0.3 percent, to 1,605.61. The Standard & Poor's 500 index rose 1.80, or 0.2 percent, to 983.44.
Advancing issues outnumbered decliners nearly 4 to 3 on the New York Stock Exchange. Consolidated volume was a light 1.79 billion shares, the same number exchanged in Monday's session.
The Russell 2000 index, which tracks smaller company stocks, rose 1.48, or 0.3 percent, to 440.89. The NYSE composite index inched up 2.10 to 5,551.19. The American Stock Exchange composite index slipped 1.62 to 959.09.
Wall Street's primary focus was the Fed, which began a two-day meeting yesterday and will deliver a decision on interest rates today.
If the Fed does reduce borrowing costs, it would be the 13th time it has done so since the beginning of 2001 and it would bring interest rates to their lowest level since the 1950s.
The Conference Board said yesterday its Consumer Confidence Index was stable in June, reflecting a more upbeat mood about the economy and the stock market longer-term prospects even in the face of a still difficult business climate.
The private research group reported that the index crept back to 83.5 from a revised 83.6 in May, better than the reading of 82 that analysts had forecast.
Advanced Micro Devices fell 28 cents to $6.31 after cutting its second-quarter sales estimate to $615 million from $715 million. The chipmaker cited deterioration in the personal computer and handset markets in Asia, due largely to the SARS virus.
Kroger rose 93 cents to $16.83 on quarterly profits that were a penny a share higher than Wall Street predicted.
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