New York – Wall Street battled back from sharp losses today to close mostly flat as investors sought buying opportunities and adjusted their holdings ahead of the Federal Reserve’s meeting on interest rates.
Stocks moved lower throughout most of the session on concerns about what central bankers might say about the economy. However, the drop – the first for the Dow Jones industrials in six sessions – did make some stock prices look more attractive ahead of the Wednesday meeting.
Fresh data released today showed the economy continues to sputter. The Commerce Department reported wholesalers’ inventories grew at a slower rate in March, failing to meet projections.
Meanwhile, the National Association of Realtors lowered its forecast for the housing market this year because of stricter lending standards and subprime woes.
Economic reports are expected to wield more influence on the direction of stocks as the pace of earnings announcements slows.
The latest batch did little to change expectations policymakers will leave rates unchanged, though Wall Street will really be looking for further direction about whether a hoped-for rate cut is in the offing.
“There’s this wait-and-see pullback with regard to what the Fed might do on Wednesday,” said Janna Sampson, a portfolio manager for Oakbrook Investments. “Given the run we’ve had, and a pretty strong start of the year, this might be a case of investors positioning their portfolios a little sooner than usual before the summer doldrums.” According to preliminary calculations, the Dow Jones industrial average fell 3.90, or 0.03 percent, to 13,309.07. The blue chip average had been up 24 of the last 27 sessions, and surpassed the 13,300 mark for the first time on Monday.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 1.76, or 0.12 percent, at 1,507.72, and the Nasdaq composite index rose 0.80, or 0.03 percent, to 2,571.75.
Fixed-income investors began to place optimistic bets ahead of the Fed meeting, sending bonds higher. The yield of the benchmark 10-year Treasury note fell to 4.63 percent from 4.64 percent late Monday.
Meanwhile, the dollar was mixed against most major currencies, while gold prices were weaker.
Oil prices advanced amid fears of supply disruptions following the bombing of three major oil pipelines by the main militant group in southern Nigeria. A barrel of light, sweet crude rose 79 cents to $62.26 on the New York Mercantile Exchange.
This pushed major oil companies higher. Exxon Mobil Corp. rose 68 cents to $81.38, a fresh 52-week high of $81.76. Chevron Corp. picked up 47 cents to $80.05, while ConocoPhillips fell 9 cents to $70.25.
Though most analysts expect stocks will continue to advance, there are rising expectations on Wall Street that a correction will be needed to sustain the bull run. Before today’s breather, the S&P 500 had closed in on its all-time high of 1,527.46, reached on March 24, 2000 at the height of the dot-com boom; the Dow’s recent run has been its best showing since 1927.
“If we keep marching up without a break, we will set ourselves up for another sell off,” said Alan Brown, head of investment for Schroder Investment Management. “But, the fundamentals still look pretty encouraging to me provided of course that the U.S. slowdown does not turn into something much worse.”
