Stocks Move Up as Fed Sits Still
NEW YORK (
) -- Stocks finished near their session highs Tuesday after the
Federal Open Market Committee
said it would
hold its key interest rate steady at near zero, all while offering investors no real surprises.
The
Dow Jones Industrial Average
gained 44 points, or 0.4%, to 10,686. The
S&P 500
advanced 9 points, or 0.8%, to nearly 1160, and the
Nasdaq
went ahead by 16 points, or 0.7%, to 2378.
>>Biotechnology Stocks With Bullish Prospects
The
Federal Reserve's
policy-making arm made little waves in its most recent monetary policy statement in the afternoon. As expected, the FOMC said the fed funds rate would remain "exceptionally low" for "an extended period." Though consensus expectations called for no change to the target rate, some market observers were eyeing that specific language for any hint of a future rate hike. The FOMC also highlighted some improvements throughout the economy, but said high unemployment and lagging housing starts, among other things, remain headwinds to growth.
Burt White, chief investment officer at LPL Financial, said the FOMC subtly upgraded overall economic conditions but appeared to downgrade the housing situation, calling housing starts "flat at a depressed level." In anticipation of the statement, White wondered if any more members would join Kansas City Fed President Thomas Hoenig in dissent about the "extended period" language. White also looked for any discussion of plans following completion of the Fed's mortgage-backed security purchases.
But in the release, Hoenig remained the lone dissenter. The statement also made clear that the $1.25 trillion in mortgage-backed securities purchases were still "nearing completion," though they remained on pace to be finished by the end of March.
"I think the Fed just kicked the can down the road. They're looking for a little more data before they shift to a tightening bias," said White, who expects a decided shift in the statement's interest rate language after the FOMC's next meeting in April.
A morning Commerce Department report appeared to affirm the FOMC's housing market worries. In February, the government said
fell 5.9% to 575,000 from 611,000 in January. Still, the level came in slightly better than the 570,000 starts that economists had been expecting. Building permits, meanwhile, fell 6.1% in February after falling 4.7% in January.
Elsewhere, both export and import prices fell in February, after rising in January, the Labor Department said. Export prices slipped 0.5%, after rising 0.7%, and import prices declined 0.3% after growing 1.3% in January.
"Economic data for February remains in the category of 'could have been worse given the snowstorms,' " said Stuart Hoffman, PNC chief economist. "Both residential construction and industrial production showed only moderate weather effects for the month."
Shares of
General Electric
(GE) - Get Report
and
Intel
(INTC) - Get Report
jostled for Dow supremacy today.
General Electric jumped over 4% on a positive report from JPMorgan analyst Stephen Tusa and an appearance by Chief Financial Officer Keith Sherin at an investor conference. Intel shares got a boost after the company introduced its latest Xeon chip today, which a company press release called "its most secure data center processor." Intel added 84 cents, or 4%, to $22.01.
The Intel jolt also resurrected the rest of the chip sector, which turned in one of the best performances on the day. The Philadelphia Semiconductor index gained 2.7% today.
But
Boeing
(BA) - Get Report
shares languished more than any other on the blue-chip average, slumping 1% after
Air Berlin
slashed Boeing aircraft orders by $1.7 billion.
General Electric also saw heavy trading on the
New York Stock Exchange
, which had a listed volume of near 4.4 billion. The Dow, meanwhile, saw volume of 227.4 million, compared to an average volume of 200.4 million.
The most traded stock on the NYSE was
Citigroup
(C) - Get Report
, as usual. The bank raised its stake in the holding company for
Banco de Chile
to 50% from 32.96%, and shares rose 4.1%, to $4.05.
Another popular stock on the NYSE was
Boston Scientific
(BSX) - Get Report
. Goldman Sachs recently downgraded shares to sell from neutral after the company said it would stop shipping certain defibrillators because of a documentation error in a Food and Drug Administration filing. The stock, however, finished 29 cents higher, or 4.3%, to $7.09, after closing the previous session nearly 13% lower.
Wal-Mart
(WMT) - Get Report
shares were among the Dow's best performers. The retailer is looking to boost the number of stores offering bank-like services by 50%, according to
The Wall Street Journal
. Its stock added 57 cents, or 1%, to $55.99.
The
Wall Street Journal
also reported that
Yahoo!
(YHOO)
is expected to acquire online sports site
Citizen Sports
. Yahoo! shares dipped 10 cents, or 0.6%, at $16.36.
Shares of
Coca-Cola
(KO) - Get Report
traded 0.1% higher to $53.70 following news that it plans to build a new bottling plant in Malaysia and will invest more than $300 million over the next five years to boost growth in Southeast Asia.
Rival
PepsiCo
(PEP) - Get Report
announced a management shake-up, saying Chief Financial Officer Richard Goodman will be replaced by Hugh Johnston, a PepsiCo veteran. Shares fell 0.1% to $66.07.
Shares of
Financial Engines
soared in their first day of trading Tuesday after pricing a healthier than expected initial public offering Monday. A retirement plan counselor, Financial Engines said it priced 10,600,000 shares of common stock at $12 per share, totaling $127.2 million in proceeds.
After committing to a series of deep budget-reduction moves, Greece appeared to satisfy a key credit-rating group today. Standard & Poor's removed Greece from its credit watch list, suggesting limited risk of a credit downgrade, according to
The Associated Press.
Late Tuesday, the American Petroleum Institute said crude supplies rose by 403,000 barrels last week. The inventory build-up was lighter than analysts' projections, who were forecasting an increase of 1.9 million barrels, according to Platts.
In commodities markets, crude oil for April delivery settled at $81.70 a barrel after trading $1.90 higher, while the
added $17.10 to settle at $1,122.50 an ounce.
The
dollar was trading lower against a basket of currencies both before and after release of the FOMC statement, with the dollar index recently down by 0.8%.
The benchmark 10-year Treasury strengthened 11/32, as the yield weakened to 3.655%.
Overseas, Hong Kong's Hang Seng fell 0.3%, and Japan's Nikkei slipped 0.3%. The FTSE in London rose 0.6%, and the DAX in Frankfurt gained 1.2%.
-- Written by Melinda Peer and Sung Moss in New York
.
