Posted on: Wednesday, May 4, 2005
Fed's latest rate hike leaves stocks mixed
By Michael J. Martinez
Associated Press
NEW YORK — Stocks stumbled to a mixed finish yesterday as the Federal Reserve kept to its policy of gradual increases in interest rates but provided little new insight into the health of the economy.
Most of the statement that accompanied the latest rate move was unchanged from the Fed's meeting of March 22 — that long-term inflationary pressures "remained well contained." The central bank acknowledged that higher energy prices are starting to slow spending growth, but that wasn't enough for the Fed to abandon its approach to rate increases.
Falling crude-oil prices gave a little support to stocks, with a barrel of light crude settling at $49.50, down $1.42, on the New York Mercantile Exchange. The bond market slipped lower, with the yield on the 10-year Treasury rising to 4.20 percent. The dollar was mixed against other currencies in European trading, and gold prices fell.
Wall Street again received mixed messages on the economy, with American factories showing a tiny 0.1 percent increase in orders last month, better than the large drop that economists had forecast. However, the vast majority of orders were for consumable goods, while orders for big-ticket, durable items fell sharply.
Declining issues outnumbered advancers by about 8-to-7 on the Big Board, where consolidated volume came to 2.19 billion shares, compared with 2.04 billion on Monday.
The Fed's Open Market Committee announced a widely expected increase of a quarter percentage point in the nation's benchmark lending rate, to 3 percent, and said future increases would remain "measured" — a phrase designed to ease investors' fears of large increases.
