Stocks Tread Water Before Fed
Stocks finished narrowly mixed Monday, as the Fed kicked off its first meeting under new Federal Reserve Chairman Ben Bernanke. Trading was cautious and volume fell ahead of the Fed's rate-hike policy decision, due Tuesday afternoon, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 29.86 points, or 0.26%, to 11,250.11, weighed down by Altria (MO) despite strength from Alcoa (AA). The broader Standard & Poor's 500 index edged lower 1.34 points, or 0.1%, to 1,301.61. The tech-heavy Nasdaq composite index rose 2.76 points, or 0.12%, to 2,315.61.
The start of the Fed's two-day meeting was in focus Monday. Wall Street expects another quarter-point rate hike, but will be watching for signs the Fed's tightening cycle is nearing an end, says S&P MarketScope.
If Bernanke reveals few clues on further rate increases, investors will turn their attention to a full plate of economic data, says Action Economics. On Tuesday, March consumer confidence is expected to rise to 102.0 from February's reading of 101.7. Later in the week are final fourth-quarter gross domestic product, personal income and personal consumption expenditures, and the Chicago Purchasing Manager's index of manufacturing activity.
In a quiet session for economic and earnings news Monday, Walgreen (WAG) posted 7% higher second-quarter profit, a penny short of analyst estimates. Shares rose.
General Motors (GM) was higher after the automaker reportedly said it will continue with its current marketing plan. Meanwhile, former unit Delphi reportedly will propose a gradual reduction in wages and benefits for its workers, rather than abrupt pay cuts.
In M&A news, telecommunications equipment maker Lucent (LU) was higher after French broadband equipment maker Alcatel (ALA) said the proposed merger between the two will be the subject of a board meeting this week.
The board of Germany's Schering (SHR) AG offered its support to fellow German drugmaker Bayer (BAY) AG's $19.6 billion bid for the company.
On the brokerage front, Toll Brothers (TOL) was higher after Wachovia upgraded the homebuilder from market perform to outperform.
Lehman Brothers (LEH) cut bank stocks from overweight to underweight, sending Citigroup (C) shares lower. The same brokerage upgraded electronics retailer Circuit City (CC), which rose.
Online marketplace eBay (EBAY) was modestly higher despite Deutsche Bank (DB) cutting its share-price estimate by 9.1%. The brokerage pointed to competition for eBay's PayPal pricing program from Google (GOOG), which was higher.
Oil giants Chevron (CVX) and Exxon Mobil (XOM) were higher after announcing a significant oil find in Africa.
In the energy markets Monday, May West Texas Intermediate crude oil futures closed down 10 cents at $64.16 a barrel, after Nigerian insurgents released three hostages.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index fell 64.1 points, or 1.06%, to 5,972.2. Germany's DAX index tumbled 60.88 points, or 1.02%, to 5,912.26. In Paris, the CAC 40 index skidded 56.27 points, or 1.08%, to 5,162.44.
Asian markets finished higher. Japan's Nikkei 225 index rose 89.23 points, or 0.54%, to 16,650.1. In Hong Kong, the Hang Seng index added 99.41 points, or 0.63%, to 15,815.87. Korea's Kospi index climbed 9.11 points, or 0.69%, to 1,330.34.
Treasury yields rose amid nervousness over the Fed meeting. Prices for 10-year Treasury notes were finished lower at 98-14/32 with a yield of 4.7%, while 30-year bonds fell to 96-13/32 for a yield of 4.73%.