Posted on: Thursday, June 30, 2005
Traders wait for Fed decision on rate hike
By Ellen Simon
AP Business Writer
NEW YORK — Nervous investors sent stocks lower yesterday as they anxiously awaited the Federal Reserve's decision on interest rates and looked past an increase in U.S. oil inventories and a solid advance in the gross domestic product.
Investors sent stocks up in early trading on falling oil prices and a Commerce Department report that the economy grew at an annual rate of 3.8 percent in the first quarter of 2005. The report's new reading on gross domestic product was a marked improvement from the 3.5 percent estimated for the quarter a month ago and matched growth in the final quarter of 2004.
But the two-day meeting of the Fed's Open Market Committee, which sets the central bank's interest rate policy, ultimately weighed on the market. The Fed's decision, and its accompanying statement assessing the economy, is expected today.
The Dow Jones industrial average fell 31.15, or 0.30 percent, to 10,374.48.
Broader stock indicators fell slightly.
Wall Street has had two preoccupations in recent weeks — interest rates and oil prices.
Most investors expect the Fed to raise rates today, the ninth rate hike in a year. More significantly, they're hoping for a sign, when the Open Market Committee releases its policy statement, that the increases will soon come to an end.
Advancers led decliners roughly 9 to 6 on the New York Stock Exchange, where consolidated volume came to 1.82 billion shares, up from 1.81 billion Tuesday.
"We're just waiting for news tomorrow," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "Traders are like kids in the back seat of the car saying, 'Are we there yet? Are we there yet?' The traders are saying, 'Is the report out? Is the report out?' "
