Wall Street: Monday close

13 April 2012

STOCKS put aside worries over interest rates and managed a half-hearted rally on the eve of a key US Federal Reserve meeting.

While a rate rise was not expected at Tuesday's meeting, the Fed's statement after the gathering was expected to be thoroughly dissected by Wall Street. As the economy continues to grow at a rapid pace, most investors expect a hike by August to combat inflation.

'The Fed is going to telegraph its intentions for the market in its statement,' said Keith Keenan, vice president of institutional trading at Wall Street Access. 'I can't imagine they'd shock the market with a hike now, but rather they'll get everyone ready for something in June or August. Overall, I think there's the potential for a positive response on the market, depending on what they say.'

Nonetheless, with trading volume light and prices falling from their session highs through the afternoon, the bounce from last week's selling was unlikely to be a signal of an overall turnaround, especially with the markets sensitive to any change in the Fed's stance.

According to preliminary calculations, the Dow Jones Industrial Average rose 88.43, or 0.9%, to 10,314.00 after falling 2.4% the previous week.

Broader stock indicators were also higher. The Standard & Poor's 500 index gained 10.26, or 0.9%, to 1117.56 after last week's 2.9% drop. The Nasdaq composite index was up 18.57, or 1%, at 1938.72 on the heels of a 6.4% skid the week before.

The Commerce Department reported that construction spending jumped by 1.5% in March from February to a seasonally adjusted annual rate of $944.1bn, the highest level on record.

The increase was three times higher than economists expected. However, manufacturing growth slowed slightly in April due to higher costs for materials, according to the Institute for Supply Management's manufacturing index.

'I don't think this was so much about the economic data, I think the market was just oversold coming into today,' said Russ Koesterich, US equity strategist at State Street. 'The economic data was good, but not great. With the low volume, this rally is not really convincing.'

Interest rate concerns kept the market down most of April, causing many investors to ignore very strong corporate earnings, analysts said.

'I think we're seeing good economic numbers, and we're catching up with some of the earnings numbers that we've ignored so far,' said Brian Belski, market strategist at Piper Jaffray. 'Institutional investors have been so reactive on rates and economic news, but we're telling our clients to take a look at the fundamentals, and the fundamentals are sound.'

Warren Buffett, chairman of Berkshire Hathaway, told investors over the weekend the holding company has already shifted its assets in anticipation of rising rates. After its annual meeting this weekend, Berkshire 'A' shares fell $590.00 to $92,800.00.

Signs of life in the technology sector helped semiconductor stocks. Global semiconductor sales rose 32.3% year-over-year, according to an industry report. Chipmaker Intel gained 31 cents to $26.04 and Advanced Micro Devices climbed 5 cents to $14.27, while chip equipment maker Applied Materials was down 15 cents at $18.12.

Sara Lee Co announced it has hired former PepsiCo executive Brenda Barnes as president and chief operating officer. The food and clothing outfit climbed 29 cents to $23.37.

InterActiveCorp, which runs Ticketmaster and the Home Shopping Network, was down $1.19 at $31.06 after it swung to a profit in the first quarter based on strong growth in its core businesses.

Adobe Systems adjusted its second quarter outlook, saying increased sales of its document reader and management software would help the company exceed previous estimates. Adobe jumped $2.50 to $44.00.

Advancing issues outnumbered falling stocks by nearly 3 to 2 on the New York Stock Exchange, where volume was 1.56bn shares, compared with 1.63bn on Friday.

The Russell 2000 index of smaller companies rose 5.67, or 1%, to 565.47.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in