| |
| |
![]() |
| |
|
| |
|
| |
|
NEW YORK: Wall Street saw a rally fizzle on Wednesday in a muted reaction to a Federal Reserve decision to maintain its present course of stimulating the economy with low rates and extra liquidity.
The Dow Jones Industrial Average closed up 30.23 points (0.31 percent) at 9,802.14, paring gains of over 100 points earlier in the day.
The Nasdaq composite turned lower, losing 1.80 points (0.09 percent) to 2,055.52 while the broad Standard & Poor's 500 index edged up 1.09 points (0.10 percent) to 1,046.50.
The market rose in anticipation of the Fed announcement and then saw choppy action after the central bank offered no surprises in its outlook or monetary policy, as the rally faded at the end of trade.
The policymaking Federal Open Market Committee (FOMC), headed by Fed chairman Ben Bernanke, said after a two-day meeting that "although economic activity is likely to remain weak for a time," its actions would support economic recovery.
The committee held the federal funds rate at zero to 0.25 percent and said it expects "exceptionally low levels of the federal funds rate for an extended period."
"That's nothing to cheer about as far as the economy is concerned," said Patrick O'Hare at Briefing.com.
"The Fed's patiently dovish stance raises questions about the sustainability of third-quarter real (economic) growth, which was cosmetically enhanced by the plastic surgeons on Capitol Hill," he added.
"It certainly doesn't lead one to believe a marked improvement in the labour market is imminent or that banks will suddenly loosen their handle on more than 900 billion dollars of excess reserves."
The good news is the Fed is not likely to raise rates anytime soon, but the bad news is that the economy remains too weak to allow even a modest rise in rates, said Boris Schlossberg at Global Forex Trading.
"Clearly, the dismal US labour environment continues to constrain US monetary authorities from taking any more aggressive action," he said.
There was little reaction to the day's economic news.
Payrolls firm ADP said its survey showed the US private sector shed 203,000 jobs in October, the seventh month in a row that employment declines were smaller than in the previous month.
A purchasing managers survey by the Institute of Supply Management said the US services sector, which makes up the bulk of the nation's economy, expanded in October for the second month running but at a slower pace.
The ISM said its non-manufacturing index dipped to 50.6 percent last month, after 50.9 percent in September. Any number over 50 indicates growth.
Among stocks in focus, Time Warner handed back early gains and fell 0.20 percent to 30.10 dollars after the media-entertainment behemoth posted a 38 percent decline in quarterly net profit but boosted its outlook.
Sector rival Walt Disney gained 1.48 percent to 28.03 dollars after Chinese authorities gave long-awaited approval to the firm to build a theme park in the booming metropolis of Shanghai.
Merck rallied 6,42 percent to 32.64 dollars after the pharmaceutical giant said it completed its acquisition of Schering Plough to become the world's number two drug manufacturer.
Kraft Foods fell 3.16 percent to 26.67 dollars after reporting a 40 percent drop in quarterly earnings that disappointed the market.
Bonds dropped. The yield on the 10-year US Treasury bond rose to 3.546 percent from 3.473 percent on Tuesday and that on the 30-year bond increased to 4.434 percent from 4.337 percent. Bond yields and prices move in opposite directions. - AFP/de
|
