- The Washington Times - Monday, August 9, 2004

NEW YORK (AP) — Wall Street trudged through a listless session yesterday, closing narrowly mixed as oil prices edged closer to $45 per barrel and investors hoped for assurance from the Federal Reserve that the economy was still on track.

Trading was light in advance of today’s Fed meeting, at which the Open Market Committee will decide whether to raise base-line interest rates by a quarter percentage point to 1.5 percent. Although the move had been widely expected before last week, a recent string of bad news has left Wall Street wondering whether the Fed will — or should — raise rates.

“Tomorrow is going to be key. We’re going to look very carefully at what the Fed has to say,” said Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston. “Until then, there’s no real conviction in trading. You’re seeing some bargain hunting, but we’re not seeing the signs of a true bottom here.”

Even the bargain hunters couldn’t withstand the overall pessimism of the market, as a wave of late-session selling erased the market’s modest gains from early in the session. Investors were particularly concerned with oil prices, which climbed once again as Russian oil giant Yukos encountered fresh problems. A barrel of light crude was quoted at $44.84, up 89 cents, on the New York Mercantile Exchange. Prices hit a record high at $44.98 earlier in the session.

The Dow Jones Industrial Average fell 0.67, or 0.01 percent, to 9,814.66.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was up 1.25, or 0.1 percent, at 1,065.22, and the Nasdaq Composite Index lost 2.25, or 0.1 percent, to close at 1,774.64.

The markets sold off heavily last week as oil prices climbed to new highs and the government reported a paltry 32,000 jobs created in July. The combination left investors concerned that inflation might take hold in an economy that threatens to slow down considerably.

The latest economic news didn’t help with forecasts, either. The government reported yesterday that wholesale inventories rose 1.1 percent in June. Wall Street had been expecting a 0.6 percent rise for the month. Although the inventory figure shows strong industrial productivity, it also raises questions on whether supply may soon outpace a reduced consumer demand.

Despite these latest concerns, however, many analysts expect the Fed to proceed with the rate increase and reaffirm its current position of a moderate but steady climb in interest rates.

“The Fed has put so much effort in the same consistent message, I’d be surprised if they said something out of character,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.

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