Stocks Little Changed as Investors Play It Safe Ahead of the Fed
September 19 2017 - 11:58AM
Dow Jones News
By Marina Force and Michael Wursthorn
U.S. stocks inched higher Tuesday, as investors braced for the
Federal Reserve's policy decision this week.
The Dow Jones Industrial Average gained 43 points, or 0.2%, to
22374 in recent trading. The S&P 500 added 0.1%, while the
Nasdaq Composite rose 0.2%.
Major U.S. indexes have mostly drifted higher in recent trading
sessions, with the S&P 500 and Dow industrials rising to fresh
records together Monday.
Some analysts attributed the lull in the stock market to
investors holding off on bets ahead of the Fed's upcoming policy
announcement. Many expect the central bank to announce Wednesday
that it will keep rates unchanged and that it will start slowly
unwinding its $4.5 trillion balance sheet.
"It's a really quiet market. People are in a wait-and-see mode
ahead of the Fed meeting," said Bret Chesney, a senior portfolio
manager at Alpine Global Management. "With the things I'm trading
today, just nodding at the stock moves prices."
Still, any messaging from the Fed that departs from investors'
expectations could shake up the markets, traders said.
"We could get some volatility tomorrow afternoon if the
statement is considerably different from what we're expecting,"
said Thomas Wright, director of equities at JMP Securities.
The S&P 500 telecommunications sector jumped 2% on Tuesday,
among the biggest gainers in the broad index, after CNBC reported
that T-Mobile and Sprint were in active talks about a merger.
Sprint rose 8%, while T-Mobile gained 4.4%.
Shares of health-care stocks lagged behind, with the S&P 500
health-care sector recently down 0.6%. Insurer Aetna and kidney
care company DaVita lost nearly 3% apiece.
Meanwhile, U.S. government bond prices strengthened, with yield
on the benchmark 10-year U.S. Treasury note recently at 2.214%,
according to Tradeweb, compared with 2.230% on Monday. Yields fall
as bond prices rise.
Looking forward, investors hope to get more details on the Fed's
rate-hike path. Many have been skeptical the Fed will raise rates
again, citing subdued inflation readings and concerns around the
economic toll of major summer storms.
"The data that has been coming out from the U.S. has been a bit
of a mixed bag...so I think it is maybe time for the Fed to take a
break," said Trip Miller, managing partner at Gullane Capital
Partners, who doubts the central bank will increase rates again
this year.
However, data last week showing a bigger-than-expected jump in
U.S. consumer prices gave a fresh boost to investor expectations
for one more rate rise in 2017.
Federal-funds futures, used by investors to place bets on the
Fed's rate-policy outlook, showed Tuesday a 57% chance that the
central bank will raise interest rates again by December, according
to CME Group data, up from 41% a week ago.
Elsewhere, the Stoxx Europe 600 added less than 0.1%, posting
its eighth advance in the past 10 trading sessions.
Markets in Asia closed mixed, with Japan's Nikkei Stock Average
jumping 2% to its highest close since August 2015 and Hong Kong's
Hang Seng Index falling 0.4%.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
September 19, 2017 12:43 ET (16:43 GMT)
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