Stocks moved higher yesterday as strong earnings and a drop in oil prices offset the impact of lower-than-expected manufacturing activity...
NEW YORK — Stocks moved higher yesterday as strong earnings and a drop in oil prices offset the impact of lower-than-expected manufacturing activity and apprehension about the Federal Reserve’s impending decision on rates.
The Dow Jones industrial average closed up 62.00 at 10,551.94.
Microsoft, one of the 30 Dow stocks, rose 11 cents to close at $26.39 a share. Boeing, also a Dow stock, gained 44 cents to $51.04.
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The broader gauges were also higher. The Standard & Poor’s 500 index rose 8.14 to 1,189.41. The Nasdaq composite index added 6.29 to 2,068.70.
Wall Street expects the Fed’s Open Market Committee to raise short-term interest rates by another 0.25 percentage point at the conclusion of its two-day meeting today. The statement that accompanies the decision will also be closely examined for clues about what lies ahead. Worry about the Fed meeting kept some investors on the sidelines, but trading was still brisk — a fact analysts found encouraging after January’s steep declines.
“I think what we’ve got here is a market that looks like it’s on the mend,” said Philip Dow, managing director of equity strategy at Dain Rauscher Wessels in Minneapolis. “To me, you can only say the surprises in the economy and in earnings have been positive this year. Of course, there are some participants who won’t do anything until they see what the Fed is going to do.”
Economists were somewhat disappointed by the Institute for Supply Management’s report on manufacturing. The private research group’s index of manufacturing activity affirmed the rebound at the nation’s factories, but not at the pace economists expected.
The reading came in at 56.4, down from a revised 57.3 in December, and just under forecasts of 57.
Oil prices, which have stayed uncomfortably high despite the relative success of weekend elections in Iraq and OPEC’s decision to maintain its current production targets, declined slightly amid concerns that the oil cartel might cut output soon. Crude futures settled down $1.08 at $47.12 on the New York Mercantile Exchange.
January was an uncharacteristically poor month for stocks, with the S&P 500 dropping 2.53 percent.
This has raised some concern on Wall Street, because January’s performance often foreshadows how trading will go for the rest of the year.
However, some have pointed out that while a good January often heralds a strong year, a down January has led to a down year only about half the time. Still, postelection years tend to be weak, which has some market watchers advising caution.
“You’re definitely seeing some institutions out there that held back in January that would’ve been out there had the markets gone up instead,” said Bill Groenveld, head trader at vFinance Investments. “I do believe, however, that if we break this downtrend and have a solid move up, we’ll see more people getting back in.”