Stocks Fail to Gain Traction Amid Fed's Mixed Messages
NEW YORK (TheStreet) -- Major U.S. stock averages closed in negative territory Tuesday as the S&P 500 and Dow Jones Industrial Average declined for a fourth consecutive day driven by uncertainties about the course of the Federal Reserve's economic stimulus program.
Fed officials threw the market into further confusion with mixed opinions on how much longer tapering should be delayed following the central bank's surprising decision earlier this month to maintain its current pace of bond-buying. The ongoing debate in Washington about funding the government for the new fiscal year that begins Oct. 1 is further complicating investor outlook.
Packaging Corp. of America (PKG) dropped 0.48% to $58.27 while Boise (BZ) tacked on 1.04% to $12.65. A large holder of Boise shares came out against the paper and packaging company's planned $2 billion sale to Packaging Corp. of America, saying that deal undervalues the company.
Economic headlines Tuesday were mixed, leading to more uncertainty. The S&P/Case-Shiller 20-city home price index showed an as expected year-over-year gain of 12.4% for July, the largest increase since February 2006 while the Conference Board's consumer confidence index slipped to a lower than expected 79.7 for September from an upwardly revised 81.8 in August, versus the average expectation of 79.9 from 81.5.
The benchmark 10-year Treasury was up 14/32, diluting the yield to 2.656%.
-- Written by Andrea Tse in New York
>To contact the writer of this article, click here: Andrea Tse.>
Fed presidents in public speeches have made varying references to the central bank's likely timetable for continuing to buy roughly $85 billion in bonds and other assets each month to stimulate growth. On Friday, Kansas City Federal Reserve Bank President Esther George said the central bank's decision to delay tapering was hurting its credibility. Dallas Federal Reserve Bank President Richard Fisher echoed George's remarks on Monday, saying that an "increase uncertainty about the future conduct of policy and call the credibility of our communications into question."
However, New York Fed Bank President William Dudley, publicly emphasized the economy's need for continued, aggressive accommodation while Atlanta Federal Bank President Dennis Lockhart voiced concern about the overall strength of the U.S. economic recovery.
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