Stocks waver as investors await Fed statement
NEW YORK -- A moderate improvement in home sales wasn't enough to get the stock market going again.
Stocks traded mixed but in a narrow range Tuesday after the National Association of Realtors said May sales of existing homes rose 2.4%. That was smaller than economists' forecast for a 2.8% increase and not enough to alleviate investors' anxiety about economic reports later in the week on durable goods orders, new home sales and personal spending.
"There's not a lot of conviction on behalf of buyers," said Jim Herrick, manager of equity trading at Baird & Co.
"The market has priced in good second-quarter earnings, and priced in the economy moving out of recession by the fourth quarter," Herrick said. "If you see any data that refutes that, the market will head lower."
This week brings two more reasons to be tentative: the Fed's monetary policy meeting, and Treasury auctions.
The central bank is widely expected to keep its key rate near zero after its two-day meeting ends Wednesday, but investors are unsure how optimistic the policymakers will be in their economic assessment — and whether the central bank will consider raising rates later this year to curb inflation.
Meanwhile, the Treasury Department plans to auction $104 billion in government debt this week. The Treasury sold $40 billion in debt Tuesday afternoon and demand was strong. Investors have been on edge around auctions because any signs that demand for government debt is waning could hit the market.
Treasury demand needs to stay strong for the government to finance its bailout and stimulus programs without significantly raising yields. Bond yields affect borrowing rates for consumers.
The stock market rallied sharply between early March and early June, and has given up some ground over the past several days. The Dow on Monday shed 201 points, the worst daily drop in more than two months.
At the close of trading Tuesday, the Dow Jones industrial average was down 16.10, or 0.19%, to 8,322.91. The broad market was mixed: the Standard & Poor's 500 index rose 2.06, or 0.23%, to 895.10, while the Nasdaq composite index dipped 1.27, or 0.07%, to 1,764.92.
