- The Washington Times - Wednesday, June 29, 2005

NEW YORK (AP) — Nervous investors sent stocks lower yesterday as they anxiously awaited the Federal Reserve’s decision on interest rates and looked past an increase in U.S. oil inventories and a solid advance in the gross domestic product.

“We’re just waiting for news …,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “Traders are like kids in the back seat of the car saying, ‘Are we there yet? Are we there yet?’ The traders are saying, ‘Is the report out? Is the report out?’”

Investors sent stocks up in early trading on falling oil prices and a Commerce Department report that the economy grew at an annual rate of 3.8 percent in the first quarter of 2005. The report’s new reading on gross domestic product was a marked improvement from the 3.5 percent estimated for the quarter a month ago and matched growth in the final quarter of 2004.

But the two-day meeting of the Fed’s Open Market Committee, which sets the central bank’s interest-rate policy, ultimately weighed on the market. The Fed’s decision and its accompanying statement assessing the economy are expected this afternoon.

The Dow Jones Industrial Average fell 31.15, or 0.30 percent, to 10,374.48. The Dow gained 114.85 Tuesday.

Broader stock indicators fell slightly. The Standard & Poor’s 500 index was down 1.72, or 0.14 percent, at 1,199.85 and the Nasdaq Composite Index fell 1.00, or 0.05 percent, to 2,068.89.

Bonds barely were changed, with the yield on the 10-year Treasury note at 3.98 percent, up from 3.97 percent late Tuesday. The U.S. dollar was down against the euro, while gold prices rose.

Wall Street has had two preoccupations in recent weeks — interest rates and oil prices.

Most investors expect the Fed to raise rates today, the ninth rate increase in a year. More significantly, they are hoping for a sign — when the Open Market Committee releases its policy statement — that the increases soon will come to an end.

The market’s anxiety about the Fed had investors ignoring a drop in crude oil prices — an event that normally would give stocks a lift. Oil futures fell 94 cents to $57.26 a barrel on the New York Mercantile Exchange after the Energy Department reported a substantial increase in gasoline production and increases in oil imports and commercial crude inventories.

The oil report did reassure stock investors that the record-high oil prices reached earlier in the week, when crude passed $60, may continue to drop and that an oil shortage doesn’t look to be imminent.

“Our sense is that companies have not been challenged to get their hands on crude,” said Bob Morris, director of equity investments at Lord Abbett. “It’s more expensive, but the availability is there.”

In company news, Oracle Corp. said its profit rose 3.2 percent in the fourth quarter, its best year-over-year profit and revenue gain since 2000. This was the first full quarter that included the PeopleSoft Inc. business, which it bought for $10.6 billion. The earnings far exceeded Wall Street’s expectations, and Oracle rose 74 cents, to $13.57.

The Food and Drug Administration (FDA) plans to add information about possible psychiatric side effects — including suicidal thoughts and psychotic behavior — to the labels of Ritalin and Johnson & Johnson’s Concerta. The FDA said it also would investigate other drugs used to treat attention-deficit disorder, the Wall Street Journal reported. Johnson & Johnson fell 37 cents, to $65.70.

Monsanto Co.’s stock fell $4.84 to $63.00 after the company, which makes RoundUp herbicide and bioengineered seeds, said third-quarter earnings fell 81 percent from last year as the result of a $248 million write-off of research and development related to acquisitions. The St. Louis company also issued a full-year earnings outlook for fiscal 2005 that is below Wall Street’s consensus.

The Russell 2000 index of smaller companies rose 1.28, or 0.20 percent, to 642.76.

Advancers led decliners roughly 9 to 6 on the New York Stock Exchange, where volume was 1.35 billion, down from 1.37 billion Tuesday.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide