Stocks narrowly mixed ahead of Fed decision.
Stocks trading in narrow range as investors await Federal Reserve announcement
By Stephen Bernard, AP Business Writer
On Wednesday August 12, 2009, 9:36 am EDT
NEW YORK (AP) -- Stocks are trading in a narrow range in the opening moments of trading ahead of the Federal Reserve's interest rate announcement, a day after the market posted its biggest losses in five weeks.
Investors have put a summer rally on hold as they search for fresh signs the economy is strengthening and pulling out of recession. The latest assessment on how the economy is faring will come from the Fed, which ends a two-day meeting Wednesday afternoon with its rate decision and an assessment of the economy.
The Dow Jones industrial average is down 3.63, or 0.04 percent, at 9,237.82. The Standard & Poor's 500 index is down 0.43, or 0.04 percent, at 993.92, while the Nasdaq composite index is up 0.92, or 0.05 percent, at 1,970.65.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW YORK (AP) -- Stock futures were little changed Wednesday ahead of the Federal Reserve's interest rate announcement, and a day after the market posted its biggest losses in five weeks.
Overseas, Asian markets fell amid new worries about the speed of economic recovery in China, while European markets were higher.
U.S. investors have put a summer rally on hold as they search for fresh signs the economy is strengthening and pulling out of its recession. The latest assessment on how the economy is faring will come from the Fed, which ends a two-day meeting Wednesday afternoon with its rate decision and accompanying assessment of the economy.
"Everything still starts and stops with the Fed," said Larry Rosenthal, president at Financial Planning Services in Manassas, Va.
It is widely expected that the central bank will hold the federal funds rate near zero percent. What investors are uncertain about it how the Fed will size up the economy -- whether it sees further signs of strengthening that would justify the gains in stocks since summer. Investors have bid stocks higher on the belief that the economy was pulling out of recession.
Rosenthal said investors also want to see what the Fed says about inflation. Fears of inflation due to an increase in government spending could force the Fed to raise interest rates. That, in turn, could slow down any economic recovery.
Ahead of the opening bell, Dow Jones industrial average futures fell 3, or 0.03 percent, to 9,213. Standard & Poor's 500 index futures declined 1.50, or 0.2 percent, to 991.40, while Nasdaq 100 index futures fell 0.50, or 0.03 percent, to 1,596.00.
A new report showing the nation's trade deficit edged up less than expected in June had little effect on trading. The Commerce Department said the deficit increased to $27 billion from $26 billion in May, which was the lowest level since November 1999.
Economists polled by Thomson Reuters had expected the deficit to increase to $28.5 billion.
In corporate news, Macy's Inc. reported a better-than-expected second-quarter profit. The retailer is also raising its outlook amid benefits from reducing costs.
The market is looking to bounce back a day after posting its biggest loss in five weeks. The Dow fell 1 percent on Tuesday, while the S&P dropped 1.3 percent.
With little new economic or earnings data to spur stocks higher, investors paused in their recent buying to book some gains. Uncertainty around the Fed's meeting also provided a time for investors to pause.
Meanwhile, bond prices were little changed ahead of an auction of $23 billion in 10-year Treasury notes. The Treasury Department is auctioning a record $75 billion in debt this week.
Investors will keep a close eye on demand for the debt because a drop in buyers could force the government to increase the interest it pays, which would drive up borrowing costs for consumers and slow an economic recovery.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, declined to 3.66 percent from 3.67 percent late Tuesday.
Bond prices rose Tuesday as traders moved out of stock and into safer investments like government bonds.
The dollar mostly fell against other major currencies, while gold prices also fell.
Overseas, Japan's Nikkei stock average fell 1.4 percent. In afternoon trading, Britain's FTSE 100 rose 0.3 percent, Germany's DAX index rose 0.7 percent, and France's CAC-40 gained 0.4 percent.
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