Stocks finished mixed Monday, with the Nasdaq inching higher and blue chips drifting lower as investors took profits ahead of Tuesday's Federal Reserve meeting. Many market watchers expect the Federal Open Market Committee (FOMC) -- the policy-setting arm of the Fed -- to abandon its easing bias regarding interest rates at Tuesday's meeting.
The Dow Jones industrial average ended down 29.50 points, or 0.28%, to 10,577.75. The Nasdaq Composite Index gained 8.76 points, or 0.47%, points, or 0.21%, to 1,877.06. The broader Standard & Poor's 500 Index lost 0.61 point, or 0.05%, to 1,165.55.
After 11 interest rate cuts to stimulate the economy, the FOMC is expected to keep rates steady. But the Fed is expected to adopt a "neutral" stance, which it hasn't done since 2000. S&P thinks that the Fed will not raise interest rates before unemployment peaks, which S&P expects in early summer. Last week, the market gained ground amid more signs that the economy is rebounding.
On Monday, high-tech groups such as semiconductor, Internet services, biotech, and computer hardware stocks, gained some strength in late trading and helped lift the Nasdaq. Media stocks were also higher.
But defensive stocks were lower. Agriculture products stocks fell after DB Alex. Brown cut its estimates and price target on giant Archer Daniels Midland (ADM). Retail, banking and drug stocks were also weaker. Overall, there is concern about valuations and caution ahead of first quarter earnings warning season.
In merger news, computer-security software maker Network Associates (NET) says it will buy back the shares of McAfee.com (MCAF) for about $205 million in stock. Network Associates spun off McAfee in 1999 and owns 75% of the stock. And online auction company eBay (EBAY) says it will acquire one-third China's leading auction site EachNet for $30 million. There's also speculation that Micron (MU) will acquire Hynix's memory chip business.
On the earnings front, General Electric (GE) says it continues to target 17-18% earnings per share growth in 2002, to $1.65-$1.67, and double-digit earnings growth in 2003. Cendant (CD) says it expects to exceed the current EPS forecast of $0.30 by at least 50% higher than $0.21 a year ago amid higher than anticipated revenue at a number of units.
Among other stocks on the move Monday, AT&T Wireless (AWE) traded lower on heavy volume after JP Morgan reportedly downgraded the stock to market perform from buy.
Trading in ACLN (ASW) was halted after the New York Stock Exchange said it is delisting the stock. Earlier Monday, the Securities & Exchange Commission suspended trading on the NYSE until Apr. 1 due to concerns over the accuracy of public information about the company.
U.S. Treasuries were mostly higher in price amid short-covering ahead of Tuesday's Fed policy meeting. There were no economic reports scheduled to be released Monday. Auctions for three-month and six-month bills went surprisingly smoothly considering the underperformance of the short-end and proximity of the FOMC meeting, says S&P MMS.
European markets ended with slight gains. In London, the Financial Times-Stock Exchange 100 index was up 7.20 points, or 0.14%, to 5,299.90 amid hopes the U.S. will lead an economic rebound that will bolster exports. In France, the CAC 40 added 37.48 points, or 0.82%, to 4,625.81. In Germany, the DAX Index gained 17.35 points, or 0.32%, to 5,418.46.
In Asia, the markets ended mixed. The Nikkei lost 149.63 points, or 1.28%, to 11,498.38. In Hong Kong, the market gained 20.39 points, or 0.18%, to 11,230.64.