- Associated Press - Thursday, August 23, 2012

NEW YORK (AP) — Nobody ever said reading the Federal Reserve was easy.

On Wednesday, the Fed appeared to suggest it was closer to taking additional steps to help the U.S. economy. Stocks rallied as a result and finished the day well off their lows.

But the prospect of Fed help seemed much less certain Thursday, and stocks fell. The Dow Jones industrial average was down 111 points at 13,061 with a half-hour of trading to go.

James Bullard, president of the Fed’s St. Louis bank, told CNBC that the minutes from the Fed’s July 31-Aug. 1 meeting, released Wednesday, were “stale” because the economy had picked up since then.

“He poured some water on the fire of the QE3 talk,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, referring to market slang for a Fed program of bond-buying to help the economy.

Another Fed regional official, Chicago President Charles Evans, told reporters in Beijing that he supports further action by the Fed, an apparent affirmation of the Fed minutes.

Stocks also fell after the government said claims for unemployment insurance rose last week by 4,000, the second straight increase. The Standard & Poor’s 500 index was down 10 points at 1,403. The Nasdaq composite index fell 17 to 3,056.

Benchmark oil fell $1.19 to $96.08 per barrel in New York. Oil prices have risen about $8 since Aug. 1, partly on hopes that the United States, Europe and China would do more to increase growth. Slower growth cuts demand for oil.

The price of gold climbed for a second straight day after the Fed minutes. Some investors buy gold to protect against inflation and take advantage of a weaker dollar when they believe the Fed is about to pump money into the economy.

Gold rose $32 an ounce, almost 2 percent, to $1,672.

China, the world’s second-largest economy after the United States, reported that manufacturing activity fell to a nine-month low, raising trader expectations that the government may step in.

“It’s just a harsh reminder that the worldwide economy continues to disappoint,” Mr. Detrick said.

Prices also rose for copper, platinum and palladium, but there wasn’t much else to trade on. That’s typical for the August lull, when many traders are on vacation and news is slow.

The big events that could move the market lie ahead — Fed Chairman Ben S. Bernanke’s speech in Wyoming later this month and a German court’s ruling next month on whether it can participate in a bailout for other European countries.

German leaders, on the eve of a critical meeting with their Greek counterparts to discuss Greece’s ongoing bailout, showed signs of the strain between the two countries.

Greece has asked for more time to put in place the spending reforms that Germany is requiring, but the German finance minister said Thursday that more time wouldn’t solve Greece’s problems.

“It’s really more of the same,” said Mike Gibbs, co-head of the equity advisory group at Raymond James in Memphis, Tenn. “What Europe has done is told us they’re going to do something. They haven’t really told us what.”

In U.S. stocks, Big Lots fared worst among S&P 500 companies. It fell more than 22 percent, losing $8.58 to $30.26, after reporting a sharp drop in its quarterly profit and slashing its forecast for the rest of the year.

Hewlett-Packard lost $1.32, or nearly 7 percent, to $17.89. The world’s largest maker of printers and PCs reported weak quarterly results, took a huge charge to write down the value of a recent acquisition and offered a disappointing forecast.

Copyright © 2018 The Washington Times, LLC.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide