Listless day on Wall Street after drop in factory orders
Wall Street finished the week with a listless session today as a decline in big ticket factory goods did little to assuage investors’ economic worries and left the major indexes slightly lower.
The market posted a modest loss for the week.
Durable goods orders dropped 0.3% in May after a sharp 4.7% drop the month before, according to the Commerce Department, the first back-to-back declines in two years.
Economists expected orders to rise 0.4%. But Corporate spending remained strong, giving investors hope that the economic slowdown may not be severe.
Yet with the Federal Reserve’s Open Market Committee meeting next Wednesday and Thursday – and widely expected to raise interest rates yet again – Wall Street’s chronic anxiety about economic growth overshadowed trading.
It is likely to continue to do so until the Fed’s decision is announced Thursday afternoon.
“The business spending within the durable goods report was encouraging once you got past the headline numbers,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.
“But even with that, there’s a lot of investors, if they’ve got an idea for a trade, they’re not going to do it until you get past the Fed meeting.”
The Dow Jones industrial average fell 30.02, or 0.27%, to 10,989.09.
Broader stock indicators were just below the flatline. The Standard & Poor’s 500 index lost 1.10, or 0.09%, to 1,244.50, while the Nasdaq composite index dropped 1.51, or 0.07%, to 2,121.47.
Bonds continued their sell-off from the previous session, with the yield on the benchmark 10-year Treasury note rising to a four-year high of 5.23% from 5.20% late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Oil prices edged higher as traders remained concerned about rising international demand, tight refinery capacity and continued unrest in the Middle East. A barrel of light crude settled at 70.87dollars, up 3 cents on the New York Mercantile Exchange.
With energy prices potentially stirring inflation, the Fed has become increasingly hawkish on raising rates to combat rising prices, which has led some on Wall Street to consider whether policy makers may go with a half percentage point increase in the nation’s benchmark rate. Most observers, however, predict another quarter%age point hike, along with a statement saying the Fed may still raise rates down the road.
“If it’s just the quarter point, and the Fed still says it could raise, then we could be in for a tough summer,” said Jay Suskind, head trader for Ryan Beck & Co. “The only thing that could save the summer is corporate earnings, whether they come in strong enough so that the economy can weather the rate hikes, or weak enough for the Fed to stop raising.”
Concerns about rates dominated the week’s trading, increasing volatility but ultimately leaving stocks little changed. For the week, the Dow slipped 0.23%, the S&P 500 lost 0.56% and the Nasdaq fell 0.4%.
In corporate news, software maker Oracle saw its quarterly earnings jump 27%, beating Wall Street’s forecasts by a penny per share after one-time charges for acquisition expenses. Revenues surged 25% for the quarter, and the company’s forecast for the current quarter met analysts’ projections. Oracle rose 57 cents to 14.90dollars.
Anadarko Petroleum dropped 3.49dollars, or 7.2%, to 44.90dollars after the company said it would acquire two rivals, Kerr-McGee and Western Gas Resources, for a total of 2.1 billion dollars. Kerr-McGee soared 18.31dollars, or 36%, to 68.61dollars on the news, while Western Gas surged 18.76dollars, or 46%, to 59.67dollars.
Amusement park operator Six Flags plunged as the company said it may have problems meeting its credit obligations and was looking to sell six of its properties. Six Flags tumbled 26%, or 1.90dollars, to 5.55dollars.
Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume came to 1.42 billion shares, compared with 1.47 billion traded Thursday.
The Russell 2000 index of smaller companies rose 2.10, or 0.31%, to 690.14.
