Little change on Wall Street
US Stocks eked out a gain for the fourth straight day today after tepid housing start and jobless claims reports gave investors few clues about the direction of the economy and interest rates.
Investors were hoping for a hint of how the Federal Reserve, which meets later this month, will formulate its monetary policy for the coming months. But today’s economic reports gave the market little guidance.
“Investors are parsing every bit of economic data for an indication that the Fed is willing to step aside” and end its year-long streak of rate hikes, said Joseph Keating, chief investment officer at AmSouth Asset Management.
The Dow Jones industrial average rose 12.28, or 0.12%, to 10,578.65 after moving in and out of positive territory for much of the session.
The Dow also inched higher the first three days of the week – an indication that investors, while uninspired by the economic data, are finding few reasons for a big selloff.
Broader stock indicators also closed narrowly higher. The Standard & Poor’s 500 index rose 4.35, or 0.36%, to 1,210.93.
The Nasdaq composite index closed up 14.23, or 0.69%, at 2,089.15.
The Commerce Department reported that housing starts edged up 0.2% in May, slightly less than expected, but the level of new construction permits remained strong, a sign of continuing strength in the sector.
The Labour Department said jobless claims were up 1,000 to 333,000 last week, in line with expectations. Recent claim levels have been moderate, but analysts expect auto industry layoffs to send them higher in July.
A report from the Philadelphia Federal Reserve that its regional economy was contracting sent stocks down temporarily. Philadelphia-area manufacturers saw overall activity fall in June, the first negative reading in 25 months, according to the unexpectedly weak report.
Stocks, which have only crept upward this week despite upbeat inflation news, are likely to trade in a narrow range until the June 29-30 meeting of the Fed’s policy makers.
The Fed is expected to raise short-term interest rates for the ninth time when it meets next, continuing the rate hikes that began last year.
The market’s focus will be the Fed’s accompanying assessment of the economy; investors are looking for signs that the string of rate hikes is coming to an end.
While Wall Street’s conventional wisdom is that rate hikes will end with the Fed’s August meeting, some analysts say rate hikes – and the attendant sideways movement that has characterized stocks for the past 17 months – will continue.
Bonds gained ground, with the yield on the 10-year Treasury note dropping to 4.50, from 4.10 late yesterday.
Oil prices climbed by 93 cents to US$56.50 (€46.71) a barrel on the New York Mercantile Exchange. News that Russian oil output was down 3.4% in April and concerns about refining capacity boosted oil prices.
Advancing issues led decliners 2 to 1 on the New York Stock Exchange, where volume came to 1.39bn shares, even with the 1.39bn shares traded yesterday.
The Russell 2000 index of smaller companies rose 6.84, or 1.1%, to 644.03.
