- The Washington Times - Wednesday, March 18, 2009

NEW YORK (AP) - Investors gave up some of their big gains Wednesday as they awaited the conclusion of the Federal Reserve’s interest rate meeting.

The Fed is expected to leave rates at their current historically low level following its two-day meeting, but the market is anxious to see how the central bank assesses the economy in its statement accompanying the rate decision. Investors also want to know if the Fed has any further moves planned to help boost the economy.

The Fed statement is expected in midafternoon. But Joe Clark, managing partner at Financial Enhancement Group, said the market’s reactions to Fed meetings have been tempered in recent months because the government has taken so many steps to help revive the economy since the credit crisis began last fall.

“We’re used to the next thing,” Clark said.

In corporate news, International Business Machines Corp. is in discussions to buy Sun Microsystems Inc. for at least $6.5 billion in cash, according to published reports.

Potential deals like IBM’s are a positive sign for the economy, Clark said. The reports of an IBM-Sun deal follow a series of planned acquisitions in the pharmaceutical industry.

“Seeing those companies reach out and use capital is critical,” Clark said.

In morning trading, the Dow Jones industrial average fell 90.72, or 1.23 percent, to 7,304.98. The Standard & Poor’s 500 index fell 7.94, or 1.02 percent, to 770.18, while Nasdaq composite index fell 4.55, or 0.31 percent, to 1,457.56.

Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange, where volume came to 163 million shares.

The Russell 2000 index of smaller companies fell 2.34, or 0.58 percent, to 401.25.

Stocks had their fifth advance in six days Tuesday after a surprisingly strong report on home construction and building permit applications. Since the rally began last week, the Dow is up 849 points, or 13 percent.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.95 percent from 3.01 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.23 percent from 0.22 percent late Tuesday.

Investors appeared little fazed by the Labor Department’s report that the consumer price index rose 0.4 percent in February, just above the 0.3 percent expected by economists polled by Thomson Reuters. A jump in gasoline prices was the primary reason for the increase in prices paid by consumers during the month.

Core inflation, which excludes food and energy, rose 0.2 percent in February, slightly higher than the 0.1 percent economists expected.

The dollar mostly fell against other major currencies, while gold prices also fell.

Oil prices fell 80 cents to $48.36 per barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average rose 0.3 percent. In afternoon trading, Britain’s FTSE 100 fell 0.9 percent, Germany’s DAX index rose 0.5 percent, and France’s CAC-40 fell 0.3 percent.


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