Stock Market Sees Thin Trading Ahead of Potential Interest-Rate Hike

Strategic Insights -

Stock prices in New York initially softened ahead of the Federal Reserve's meeting on Tuesday, but quickly recovered as investors engaged in anticipatory bargain hunting, anticipating a potential interest-rate hike. The Dow Jones industrial average and S&P 500-stock index both turned higher, with the Dow up 12.43 points to 3672.11 and the S&P 500 up 1.13 to 445.27. The market's cautious mood was reflected in a decline in advances over declines, with 893 issues falling compared to 847 gains among the 2,476 issues traded on the New York Stock Exchange.

Key Takeaways:

  • The Dow Jones industrial average opened up 12.43 points to 3672.11, while the S&P 500-stock index was up 1.13 to 445.27.
  • The market's cautious mood was reflected in a decline in advances over declines, with 893 issues falling compared to 847 gains among the 2,476 issues traded on the NYSE.
  • Treasury securities bounced back from initial softness, with the 30-year bond up 4/32 to 85 11/32 and yielding 7.49 percent.
  • The dollar was mixed, changing hands at 1.6735 German marks and 104.40 Japanese yen, compared to 1.6695 marks and 105.05 yen late Friday.
  • Investors are awaiting the Federal Reserve's meeting on Tuesday, where they expect the FOMC to raise short-term interest rates to 4 percent, with some anticipating a 50-basis-point increase or a half-point rise in the discount rate.
  • Joseph Barthel, director of investment strategy at Fahnestock & Co., stated that once the Fed makes its move, the market will gain "breathing room" and there will be minimal uncertainty.

Statistics:

  • The Dow Jones industrial average added 6.84 points on Friday and was up 12.43 points on Monday.
  • The S&P 500-stock index was up 1.13 to 445.27, while the NYSE composite index was ahead 0.45 to 246.21.
  • Declines edged advances 893-847 among the 2,476 issues crossing the NYSE tape.
  • Volume was about 66,240,000 shares on Monday, compared to 85,130,000 in the same period on Friday.

Sources:

  • "Stock prices turn higher in thin trading early Monday"
  • Bloomberg News
  • Associated Press