Posted on: Wednesday, November 10, 2004

Stocks in hold pattern pending Fed remarks

• Hawai'i Stocks
• Updated Market Chart

By Seth Sutel
Associated Press

NEW YORK — Stocks barely budged yesterday while investors awaited the Federal Reserve's decision on interest rates and while they digested troubling developments at insurance broker Marsh & McLennan Cos. and drugmaker Merck & Co.

While the Fed's policy committee is expected to boost interest rates again at today's meeting as another pre-emptive strike against inflation, questions remain over what signals the central bank might issue on the overall economy in its policy statement.

Robert Christian, chief investment officer at Wilmington Trust Co., said the market had factored in a rate increase but was anxious about what the Fed might say about the economy, including the inflationary impact of the dollar's recent decline. A weaker dollar makes imports more expensive.

"The issue is going to be the rhetoric they use around the rate increase," Christian said. Some investors, he said, are worried that the dollar's fall might prompt the Fed to move more aggressively than it would otherwise. Higher rates would make U.S. investments more attractive, helping boost demand for the dollar versus other currencies.

The market's unease was tempered by a strong drop in crude oil futures, which continued their abrupt downward trend of recent weeks.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, while Nasdaq advancers led by a slim margin. Consolidated volume came to 1.91 billion shares, compared with 1.76 billion on Monday.