Dow Fails to Regain 11,000
NEW YORK (TheStreet) -- Stocks finished near the flat line after the Federal Open Market Committee released minutes in the afternoon from its March 16 meeting, offering a mixed assessment of the economic recovery and little indication about when an interest rate increase would come.
With the Dow Jones Industrial Average hovering just below the 11,000 mark, investors also wondered whether stocks could push the index back to a level not seen since September 2008.
But it was not to be Tuesday, as the Dow fell 4 points, or 0.03%, to close at 10,970. But the S&P 500 improved by nearly 2 points, or 0.2%, at 1189, as the Nasdaq went higher by 7 points, or 0.3%, at 2437.
The market had awaited hints in the FOMC minutes of when the group plans to hike its key rate from its near-zero level. But the group offered few giveaways, continuing to suggest economic concerns will probably keep a rate hike at bay in the immediate term. During the meeting, FOMC members discussed their continued decision to keep the fed funds rate at "exceptionally low levels ... for an extended period." Though participants said the "extended period" language was based on economic conditions rather than any specific passage of time, and could mean monetary tightening sooner, members also suggested the period could last longer if economic conditions worsened. "What I read there is it can go either way," said Brian Bethune, chief U.S. financial economist at IHS Global Insight. "Maybe they're trying to get rid of the [presumptive] six-month timeline that people have sort of thrown out there." Kansas City Fed President Thomas Hoenig, the lone dissenter from the FOMC statement, suggested the extended period passage should change to "a low level of the federal funds rate for some time." About Hoenig's proposed subtle shift, Bethune laughed, "it's worse than being able to interpret the ancient Hebrew text of the old testament." Stocks edged to their highs of the session in an otherwise tight range of trading after the release, but drifted back to mixed territory at the closing bell. Jeff Kleintop chief market strategist at LPL Financial, likened the significance of passing the 11,000 mark on the Dow to seeing job growth in Friday's March nonfarm payrolls report. "It's a sign of really advanced recovery in the market. Just as seeing job gains for the first time on Friday was psychologically important because we know signs of recovery don't count unless we're creating more jobs, Dow 11,000 is important because the last time the market was trading at that level was before the collapse of Lehman Brothers. So it's kind of like a statement that we've healed and have gotten back to where we were before the crisis," he said. Overseas, Japan's Nikkei slipped 0.5%. Hong Kong's Hang Seng was closed for a holiday. The FTSE in London added 0.6%, and the DAX in Frankfurt rose 0.3%. Great Britain's national election will take place on May 6, according to British Prime Minister Gordon Brown. Polls show Brown and his Labour Party are falling behind the Conservative Party's David Cameron. A Conservative victory would return the party to power for the first time in 13 years.
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