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US stocks end flat as Fed stance questioned

US stocks end flat as Fed stance questioned
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First Published: Fri, Mar 23 2007. 08 51 AM IST
Updated: Fri, Mar 23 2007. 08 51 AM IST
Reuters
New York: US stocks barely budged on 22 March as investors consolidated Wednesday’s gains and second-guessed expectations that the Federal Reserve’s next policy move will be an interest rate cut.
Motorola Inc. added to the cautious mood on Wall Street after the mobile phone maker warned late on Wednesday of a quarterly loss.
As expected, the Fed left rates unchanged on Wednesday. But in an accompanying statement the central bank dropped previous language about possible rate increases, prompting expectations the rate may be cut and sending stocks surging. Still, the Fed said it remained cautious about inflation.
“The fog is clearing somewhat, and everyone is looking at the Fed statement and seeing perhaps it wasn’t totally dovish,” said Marc Pado, a San-Francisco-based US market strategist for Cantor Fitzgerald & Co. “They opened the door to a rate move in both directions.”
The Dow Jones industrial average gained 13.62 points, or 0.11%, to 12,461.14. The Standard & Poor’s 500 Index fell 0.50 points, or 0.03%, to 1,434.54. The Nasdaq Composite Index lost 4.18 points, or 0.17%, to 2,451.74.
Trading volume was tepid on the New York Stock Exchange, with about 1.62 billion shares changing hands, below last year’s estimated daily average of 1.84 billion, while on Nasdaq, about 1.92 billion shares traded, below last year’s daily average of 2.02 billion.
As of Thursday’s market close, the S&P 500 index had recovered about 80% of its drop since a period of sharp losses that began on Feb. 27 with a sell-off triggered by a fall in Chinese stocks. Much of the recovery occurred from Monday to Wednesday.
On the NYSE, Motorola shares registered their biggest daily percentage drop in more than two months, falling 6.6% to $17.50, after the company warned it would post a first-quarter loss. Motorola also said the full year’s earnings and revenue would be worse than expected. Its stock sagged to as low as $17.45 -- its lowest level in nearly two years.
Weighing down the Nasdaq was software maker Intuit Inc.. The company said sales of its TurboTax tax preparation software rose just 1 percent from a year ago, sending its shares down 8.2% to $27.54.
On Nasdaq, Palm Inc.’s shares slid 8.8% to $17.74 as hopes for a buyout for the handheld computer and cell phone maker faded on Motorola’s news. After the closing bell, the device maker reported earnings, excluding items, that were higher than analysts’ estimates, helping the stock recover some of its loss.
Palm shares were up 1.1% at $17.93 in electronic composite trading.
Oil stocks gained as US crude for May delivery rose 3.5% to $61.71 a barrel. US gasoline inventory data raised worries about tight supplies before the busy summer driving season. Shares of Exxon Mobil rose 1.5% to $74.36 on the NYSE. The stock was the biggest advancer on both the Dow and the S&P 500.
The subprime mortgage market turmoil was back on investors’ radar. Countrywide Financial Corp., the top U.S. mortgage lender, said subprime defaults for 2006 loans may exceed the company’s worst single origination year.
Countrywide shares were down 1.5 percent to $36.38 on the NYSE. Shares of Wells Fargo & Co., another major U.S. mortgage lender, fell 1.4 percent to $34.99 and Washington Mutual Inc. stock lost 2 percent to $42.06.
Advancing stocks nearly matched declining ones on the NYSE. On the Nasdaq, gainers outnumbered losers by a slight 11-to-10 ratio.
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First Published: Fri, Mar 23 2007. 08 51 AM IST
More Topics: Money Matters | Global Markets |