Wednesday, 29 October 2008

US stocks waffle ahead of Fed rate decision

Wall Street drifted in quiet trading on Wednesday after its huge rally a day earlier, as investors awaited an afternoon decision on interest rates from the Federal Reserve. The major indexes alternated between gains and losses.

The market expects policymakers to lower the fed funds rate by a half point to 1 percent, though there has been speculation that smaller or wider cuts are possible.

The only certainty is that Wall Street will pore over the Fed's statement on its decision and its reading of the economy. That assessment, along with any move on rates themselves, could lead the market to retreat, rally or simply shrug off a move that it writes off as expected.

Stocks' fluctuations were not surprising given the light trading volumes and the 889-point advance logged by the Dow Jones industrials Tuesday. The Dow and the Standard & Poor's 500 index posted gains of nearly 11 percent, while the Nasdaq composite index rose 9.5 percent as investors, confident about the prospects for a rate cut, piled into the market to pick up stocks that have become bargains.

The Dow's gain was its second-largest daily point gain; the biggest was its 936-point surge on Oct. 13 that later evaporated as fears about the economy grew. The stock market has been extremely volatile lately _ beyond a simple case of investor indecision, the market's back-and-forth moves may also be part of its attempt to establish a bottom.

The Dow rose 13.86, or 0.15 percent, to 9,078.98 after falling in midmorning trading.

Broader stock indicators were narrowly lower. The S&P 500 index fell 3.58, or 0.38 percent, to 936.93, and the Nasdaq composite index fell 4.14, or 0.25 percent, to 1,645.33.

The Russell 2000 index of smaller companies rose 5.06, or 1.05 percent, to 487.61.

Advancers outnumbered decliners by about 2 to 1 on low volume of 256 million shares on the New York Stock Exchange.

Source: EconomicTimes

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