Stocks sluggish ahead of Fed meeting
By Seth Sutel AP Business Writer
NEW YORK (AP) – Stocks barely budged Tuesday while investors awaited the Federal Reserve’s decision on interest rates and while they digested troubling developments at insurance broker Marsh & McLennan Cos. and drugmaker Merck & Co.
While the Fed’s policy committee is expected to boost interest rates again at Wednesday’s meeting as another pre-emptive strike against inflation, questions remain over what signals the central bank might issue on the overall economy in its policy statement.
Robert Christian, chief investment officer at Wilmington Trust Co., said the market had already factored in a rate increase but was anxious about what the Fed might say about the economy, including the inflationary impact of the dollar’s recent decline. A weaker dollar makes imports more expensive.
“The issue is going to be the rhetoric they use around the rate increase,” Christian said. Some investors, he said, are worried that the dollar’s fall might prompt the Fed to move more aggressively than it would otherwise. Higher rates would make U.S. investments more attractive, helping boost demand for the dollar versus other currencies.
According to preliminary calculations, the Dow Jones industrial average was down 4.94, or 0.05 percent, at 10,386.37.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index slipped 0.81, or 0.07 percent, to 1,164.08, while the Nasdaq composite index was up 4.08, or 0.2 percent, at 2,043.33.
The market’s unease was tempered by a strong drop in crude oil futures, which continued their abrupt downward trend of recent weeks. A barrel of light crude settled at $47.37, down $1.72, on the New York Mercantile Exchange.
Marsh & McLennan was down 56 cents at $26.80 after the company posted disappointing quarterly results and said it would cut 3,000 jobs, or about 5 percent of its work force, amid the continuing fallout over charges of insurance bid-rigging by New York Attorney General Eliot Spitzer.
Marsh also said it had reached a tentative $40 million settlement with the Securities and Exchange Commission over questionable brokerage allocation practices at its asset management firm, Putnam.
Merck was down 57 cents at $26 as the Dow’s biggest decliner after disclosing late Monday that the Securities and Exchange Commission and the Justice Department were examining the company’s handling of Vioxx. Merck recently pulled the leading arthritis drug off the market after studies showed it increased the risk of heart attacks.
Elsewhere in the Dow, Caterpillar Inc. was up $1.30 at $88.31 as the measure’s biggest gainer, followed by Boeing Co., up 64 cents at $52.51.
Cisco Systems Inc. was down 22 cents at $19.75 in anxious trading before the technology bellwether’s quarterly profit report, which came in after the close. Shares of the networking giant shed another 35 cents to $19.40 in after-hours trading prior to the announcement.
The market also was digesting other earnings news as the third-quarter reporting season entered its final stages.
Satellite TV broadcaster EchoStar Communications Corp. was up 69 cents at $30.71 after reporting that its earnings nearly tripled as the company added about 350,000 new subscribers. EchoStar also said it would pay a one-time dividend of $1 a share, or a total of $455 million, next month.
Cablevision Systems Corp. was up 46 cents at $20.49 after the Long Island, N.Y.-based cable TV provider reported a much narrower third-quarter loss than Wall Street had been expecting.
Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, while Nasdaq advancers led by a slim margin. NYSE volume came to 1.45 billion shares, compared with 1.36 billion on Monday.
The Russell 2000 index, which measures smaller company performance, was up 4.56, or 0.76 percent, at 606.64.
Overseas, Japan’s Nikkei stock average fell 0.2 percent, Britain’s FTSE 100 rose 0.02 percent, Germany’s DAX index fell 0.09 percent, and France’s CAC-40 fell 0.19 percent.
___
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
AP-ES-11-09-04 1625EST