Late-day bounce on Wall Street
A late rally gave US stocks a moderate advance today as a second day of sharply lower oil prices calmed investors uncertain about the direction of interest rates.
Better-than-expected earnings from Coca-Cola and United Technologies Corp propped up the Dow Jones industrials, while mild wholesale inflation data also lent some support to the market.
But concerns about conflict in the Middle East appeared to make investors uneasy about buying: Stocks spent most of the session lower before recovering late in the day.
John Forelli, portfolio manager for Independence Investments, said traders were bracing for Federal Reserve Chairman Ben Bernanke’s appearance before Congress tomorrow.
“It’s the first time in a while I can remember that we were within three weeks of a Fed meeting and Fed fund futures were 50-50,” Forelli said, meaning the market is divided on whether the US central bank will boost interest rates when it meets on August 8. “Bernanke tomorrow could be a lynchpin for a rally or continued malaise in the trading range we’ve seen.”
While a modest rise in core producer price index helped the inflation picture, analysts said the stronger-than-forecast gain in overall PPI raised the possibility of more rate hikes from the Fed and also unnerved the bond market. Downbeat housing data renewed fears about an economic slowdown.
The Dow Jones industrial average climbed 51.87, or 0.4%, to close at 10,799.23, after sinking as much as 63 points earlier.
Broader stock indicators also recouped early declines. The Standard & Poor’s 500 index gained 2.37, or 0.19%, to 1,236.86, and the Nasdaq composite index rose 5.51, or 0.27%, to close at 2,043.23.
