Market drops ahead
of Fed rate meeting

NEW YORK » Stocks crept lower yesterday as Wall Street steadied itself after last week's losses and waited for the Federal Reserve's meeting on interest rates. Fears that second-quarter earnings could disappoint also weighed on the market.

The Fed's Open Market Committee is widely expected to raise rates for the ninth time in a year when it meets tomorrow and Thursday, but investors are waiting to see policymakers' assessment of the economy, to be issued at the end of the meeting.

Until the Fed's intentions are clear, investors are likely to do very little, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Is this the ninth inning or are we going into extra innings?" he said.

Wall Street looked past record high oil prices. A barrel of crude oil climbed as high as $60.95 before closing at $60.54 a barrel, up 70 cents, on the New York Mercantile Exchange. The increase came amid concerns that supplies would not meet demand, worries about refining capacity and news that Iran's new president would be focusing on its domestic market instead of exports.

Analysts said prices could climb even higher, but for the moment, Wall Street didn't seem particularly worried.

"The market seems to be shrugging off oil a little bit," said Brian Gendreau, investment strategist at ING Investment Management. "Perhaps there's a feeling that the selloff Friday was overdone."

The Dow Jones industrial average fell 7.06, or 0.07 percent, to 10,290.78 after dropping nearly 290 points Thursday and Friday combined.

Broader stock indicators also fell. The Standard & Poor's 500 index slipped 0.88, or 0.07 percent, to 1,190.69, and the Nasdaq composite index declined 8.07, or 0.39 percent, to 2,045.20.

Another factor that may keep stocks nearly flat in coming sessions is that analysts have slightly lowered expectations for second-quarter earnings, Ablin said. This is the first quarter of the last six where expectations have fallen.

Several companies issued warnings yesterday.

International Paper Co. fell $1.02 cents to $31.43 after the company said second-quarter earnings would miss estimates because of weaker paper and packaging sales. Cardinal Health Inc. fell $4.08 to $56.43 after the company said investments in research and development and infrastructure would push 2006 earnings well below estimates.

Energy and utility stocks did well, thanks to increasing oil prices, but technology, health care and consumer staples lost ground, due to fears of an economic slow down.