June 29 (Bloomberg) -- U.S. stocks fell amid anticipation the Federal Reserve will raise interest rates tomorrow for the ninth time in a year and signal further increases are coming.

Concern about the central bank's policy decision took precedence over better-than-expected results from American International Group Inc. and Oracle Corp. and a government report showing faster economic growth last quarter than first estimated.

``Everybody is just sitting tight until we get some news from the Fed,'' said James Park, a director of institutional trading at Rodman & Renshaw Inc. in New York. ``It's just a wait-and-see market, and the see will be earnings reports after the Fed.''

The Standard & Poor's 500 Index slipped 1.72, or 0.1 percent, to 1199.85. Energy shares such as Exxon Mobil Corp. made up almost a third of the drop as oil prices slumped. The Nasdaq Composite Index fell 1, or 0.1 percent, to 2068.89. The Dow Jones Industrial Average ended down 31.15, or 0.3 percent, at 10,374.48, completing its seventh decline in eight days.

Even with today's loss, the S&P 500 is poised to finish the quarter with a 1.6 percent gain, recouping more than half of its drop from the first three months of the year. The index has rebounded 5.5 percent from its 2005 low set on April 20.

All but one of 88 economists in a Bloomberg News survey expect the Fed to boost its target rate by a quarter-point to 3.25 percent tomorrow. The central bank, which raised its benchmark by quarter-point increments at every one of its policy meetings since last June, last month reiterated its plan to make future increases at a ``measured'' pace.

GDP

The Commerce Department today said gross domestic product grew at a 3.8 percent annual rate from January through March, faster than the 3.5 percent first estimated and matching the pace in the fourth quarter. The GDP price index, a measure of inflation tied to the report, increased at a 2.9 percent annual rate, revised from 3.2 percent.

``With inflation being better than expected, that's driving interest rates lower and that's a positive for the market,'' said Scott Jacobson, chief investment strategist for Jefferies & Co. in New York. ``Over time, economists have been bringing down their forecasts for how high the Fed will go. The market is now looking for only another 50 basis points, perhaps another 25 basis points, but nothing beyond that.'' A basis point is 0.01 percentage point.

Five stocks advanced for every four that fell on the New York Stock Exchange. Some 1.3 billion shares changed hands on the Big Board, 15 percent less than the daily average this year.

AIG, Oracle Gain

AIG, the No. 1 insurer, climbed $3.31 to $58.48. The company, reporting its first results since a $3.9 billion earnings restatement, said fiscal first-quarter profit excluding realized gains on investments and derivatives was $1.21 a share. Analysts polled by Thomson Financial expected $1.18, on average.

AIG's gain helped send a measure of financial companies up 0.6 percent. St. Paul Travelers Cos., the second-largest U.S. commercial insurer, increased 96 cents to $39.87.

Oracle, the world's third-largest software maker, added 74 cents to $13.57. The company's fiscal fourth-quarter profit, excluding one-time items, was 26 cents a share, beating the 23- cent average analyst estimate in a Thomson survey.

``Profit growth should be very, very strong,'' through 2006, said David Goerz, who oversees $18 billion as chief investment officer at HighMark Capital Management in San Francisco. He expects the S&P 500 to climb 10 to 12 percent through next year. ``We are looking at strong back-to-back returns for the stock market.''

Energy Shares

A gauge of energy shares fell 0.5 percent following a decline in oil prices. Crude for August delivery declined 1.6 percent to $57.26 a barrel in New York as a government report showed U.S. oil and fuel inventories increased.

Exxon, the world's biggest publicly traded oil company, slid 65 cents to $58.44. Occidental Petroleum Corp. fell $1.30 to $77.67.

Symbol Technologies Inc., Monsanto Co. and General Mills Inc. were the three worst performers in the S&P 500 after they had disappointing forecasts or results.

Symbol Technologies, the maker of bar-code scanners, lost 75 cents, or 7.2 percent, to $9.72. The company expects 2005 revenue to rise as much as 6 percent, down from its earlier prediction of at least 10 percent growth. It will also cut 700 jobs.

Monsanto retreated $4.84, or 7.1 percent, to $63. The world's biggest developer of genetically engineered crops forecast a fourth-quarter loss that was bigger than analysts expected.

General Mills dropped $3.40, or 6.7 percent, to $47.21 after the No. 2 U.S. cereal maker said sales declined for the first time in four years. Fourth-quarter revenue at the maker of Cheerios and Lucky Charms declined 2.5 percent to $2.72 billion.

Spiders, QQQQs

The S&P 500 shares, called Spiders, lost 32 cents to $119.83. Nasdaq-100 tracking shares, known by their QQQQ symbol, slipped 8 cents to $37.07.

S&P 500 futures expiring in June fell 3.80 to 1202.90 on the Chicago Mercantile Exchange. Nasdaq-100 Index futures lost 5.50 to 1511.50.

The Russell 2000 Index, which tracks companies with a median market value of $486 million, rose 0.2 percent to 642.76. The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares was little changed, down 8.92 at 11,930.05. Based on changes in the Wilshire, the value of stocks decreased by $11.1 billion.

American International Group Inc. (AIG US)
Exxon Mobil Corp. (XOM US)
General Mills Inc. (GIS US)
Monsanto Co. (MON US)
Occidental Petroleum Corp. (OXY US)
Oracle Corp. (ORCL US)
Symbol Technologies Inc. (SBL US)

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.

Last Updated: June 29, 2005 17:39 EDT