Stocks Advance After Inflation Remarks
Wednesday January 11, 3:29 pm ET
By Ellen Simon, AP Business Writer
Stocks Resume Advance After New York Fed President Says Inflation 'Quite Moderate'
NEW YORK (AP) -- Stocks resumed their advance Wednesday after New York's Federal Reserve president gave a speech saying core inflation is "quite moderate."
Since fighting inflation is the U.S. Federal Reserve's top concern, investors interpreted the remarks by New York Fed President Timothy Geithner as another sign that the Fed might halt its year-plus streak of short-term interest rate hikes.
The Fed's next move and the quality of fourth-quarter earnings will determine the direction stocks take, said Todd Leone, managing director of equity trading at SG Cowen Securities.
"We've had a tremendous rally this year," he said. " I think the market is debating which way to go."
Earlier in the session, stocks fell after investors were spooked by a profit warning from DuPont Co. and BP PLC's announcement that its fourth-quarter oil production slipped.
In afternoon trading, the Dow Jones industrial average rose 31.30, or 0.28 percent, to 11,042.88.
Broader stock indicators were higher. The Standard & Poor's 500 index rose 4.93, or 0.38 percent, to 1,294.62, and the Nasdaq composite index rose 11.97, or 0.52 percent, to 2,332.29.
Bonds were lower, with the yield on the 10-year Treasury rising to 4.46 percent from 4.43 percent Wednesday. The U.S. dollar fell against other major currencies in European trading. Gold prices were higher.
Crude oil futures rose. A barrel of light crude was quoted at $63.90, up 53 cents, in trading on the New York Mercantile Exchange.
Wall Street saw strong advances in the first five trading days of the year, but after the Dow Jones industrial average crossed 11,000 Monday for the first time in more than four years, stocks closed flat Tuesday. The Dow and the Standard & Poor's 500 both fell by a hair and the Nasdaq composite booked the barest gain.
"Stocks have been flat, in line with the high levels," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.
The chemical maker DuPont fell $1.47 to $41.08 after it said its fourth-quarter earnings will be about 10 cents per share for the period, far beneath its October guidance of 20 cents to 25 cents per share. DuPont said results were hurt by suspended operations and logistical problems from hurricanes Katrina and Rita in the Gulf Coast, along with separate production interruptions at plants in Brazil, the Netherlands and the United States.
BP, one of the world's largest oil companies, fell 9 cents to $68.09 after it said its oil production for the fourth quarter of 2005 would be slightly lower than the same period last year due to the hurricanes. BP also disclosed more than $1.3 billion of charges on its refining and distribution businesses.
Guidant Corp. rose $1.01 to $70.40 as the company's board wrestled over whether to accept Boston Scientific Corp.'s $25 billion bid for the company. Competing suitor Johnson & Johnson made an 11th-hour effort to negotiate a new deal, according to news reports. Boston Scientific fell 97 cents to $25.51; J&J fell 46 cents to $62.64.
Advancing issues outnumbered decliners by roughly 8 to 7 on the New York Stock Exchange, where volume was 1.35 billion shares, up from 1.32 billion Tuesday.
The Russell 2000 index of smaller companies fell 0.25, or 0.04 percent, to 710.74. The index, which closed above 700 for the first time Monday, has reached record closes two straight days.
Overseas, Japan's Nikkei stock average rose 1.48 percent. Britain's FTSE 100 rose 0.75 percent, Germany's DAX index gained 0.69 percent, and France's CAC-40 added 0.59 percent. |
