Dow Jones and Nasdaq markets sent mixed signals on Thursday morning, as investors bet on another interest rates cut by the Federal Reserve in March.
US stock markets were mixed Thursday in the wake of lackluster economic reports, as investors betted the news would force the Federal Reserve to continuing cutting interest rates.
Market participants said the sluggish economic readings would likely spur the Fed to cut borrowing costs at a policy meeting next month. The Fed has slashed borrowing costs since September in a bid to underpin economic momentum.
The Dow Jones Industrial Average was down a slight 4.40 points (0.04 percent) at 12,422.86 at 1550 GMT. The Dow had closed higher Wednesday despite oil prices rocketing to fresh record highs above 101 dollars a barrel.
The Nasdaq composite was up 8.48 points (0.36 percent) at 2,335.58 and the broad-market Standard & Poor's 500 index had dropped 0.96 points (0.07 percent) to 1,359.07.
"The market action has improved somewhat recently. That is coming off a pretty bad tone, of course. Nevertheless, the recent stability is encouraging," said Dick Green, president of Briefing.com.
A decline in a key economic gauge and a separate report, showing manufacturing activity in the Philadelphia region continued to weaken, bolstered market hopes for fresh rate cuts.
The Conference Board, a private research group, said its index of Leading Economic Indicators fell 0.1 percent in January.
"The change in the Leading Index, including the duration, intensity, and dispersion across markets, suggests weak growth going forward," said Ken Goldstein, a labor economist at the Conference Board.
The research group cited tumbling stock prices and declining demand for home-building permits as the main reasons for the index's latest drop.
Separately, the Federal Reserve Bank of Philadelphia released a downbeat snapshot on regional manufacturing which also weighed on Wall Street.
"Activity in the region’s manufacturing sector continued to weaken this month," the bank said.
Fed officials said general manufacturing activity, shipments of goods and new orders "remained negative."
The reports suggested wider economic momentum remains under pressure after gross domestic product (GDP) growth slowed markedly during the fourth quarter of 2007 amid a worsening housing slump and financial market turmoil.
Economists are divided on whether the world's biggest economy will slide into a recession or continue expanding.
"Our own view remains that the economy is likely to be even weaker than the FOMC (Federal Open Market Committee) expects, especially in the first half of the year, where we expect an outright contraction in real GDP," Goldman Sachs economists said late Wednesday in a briefing note.
Many economy-watchers expect the FOMC to unleash a rate cut of 50 basis points at a March 18 policy meeting. The US central bank has cut its key short-term federal funds rate by 225 basis points to 3.00 percent since September.
Financial stocks were generally stronger.
Citigroup was up 0.4 percent at 25.61 dollars while Morgan Stanley's shares were 0.7 percent higher at 43.84 dollars.
Chevron was down 1.3 percent at 85.17 dollars and ExxonMobil was 0.7 percent lower at 87.44 dollars amid recent oil price spikes.
Bond prices rose as the yield on the 10-year US Treasury bond fell to 3.828 percent from 3.917 percent Wednesday while that on the 30-year bond dropped to 4.546 percent from 4.644 percent.
Bond yields and prices move in opposite directions.
Date created : 2008-02-21