Star-Bulletin news services
Markets rally amid
uncertain future
NEW YORK >> Lower-than-expected housing figures coaxed buyers back to Wall Street yesterday, giving stocks a subdued rally as investors grew hopeful that the economy might be cooling. Technology stocks had the largest advance, but low volume pointed to a general lack of conviction in the market.
The Commerce Department's housing report gave investors some much-needed hope that the Federal Reserve, concerned about an overheating economy, might not raise interest rates as high or as fast as the market has feared.
However, in the aftermath of Monday's slaying of the Iraqi Governing Council president, many would-be buyers sat out the session despite prices made attractive by weeks of selling.
"All this bad news we've had, you've got to look at the market not just as a whole, but also at individual stocks," said Jay Suskind, head trader at Ryan Beck & Co. "Let's not throw the baby out with the bathwater here. There's some strong stocks out there."
The Dow Jones industrial average was up 61.60, or 0.6 percent, at 9,968.51.
Broader stock indicators were moderately higher. The Standard & Poor's 500 index gained 7.39, or 0.7 percent, to 1,091.49, and the Nasdaq composite index was up 21.18, or 1.1 percent, at 1,897.82.
The price of the Treasury's 10-year note closed down 1 1/32 point, while its yield rose to 4.73 percent from 4.69 percent Monday. Two-year Treasury notes fell 332 point and yielded 2.52 percent, up from 2.48 percent Monday.
The Commerce Department said homes were being built at an annual rate of 1.97 million, representing a 2.1 percent decline from a strong March reading. With mortgage rates expected to rise, economists expect the housing market to come off its recent flurry of activity, but the industry was expected remain healthy.
However, with volume on the New York Stock Exchange very light and prices slipping slightly from their session highs, analysts expected more losses and few gains, at least in the short term.
"This is not the stuff of which bull markets are rejuvenated," said Hugh Johnson, chief investment officer at First Albany Corp. "It looks like the market's got to find a lower level before the bull market can resume."
And although many investors are looking to the Federal Reserve meeting in June for a reading on inflation and interest rates, it could be a while before Wall Street gets a good reading on how well any rate hikes are managing inflation.
"The market is still going to have some trouble figuring out if we're going to have a big or small inflation spike, and is the Fed going to be ahead or behind it," said Scott Wren, equity strategist for A.G. Edwards & Sons. "Those questions are going to take a couple of months to work out, and until then, we'll be stuck in this range."
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