Stocks retreat on inflation, growth and rate worries
Discuss By Mark Cotton, MarketWatch Last Update: 5:12 PM ET May 31, 2006
NEW YORK (MarketWatch) -- U.S. stocks ended higher Wednesday, wrapping up a weak month on a positive note, but the S&P 500 put in its worst May in 22 years in a market plagued by worries over inflation, slowing economic growth and uncertainty over the outlook for interest rates. The Nasdaq Composite Index suffered its worst May performance in six years. The Dow Jones Industrial Average ($INDU : Dow Jones Industrial Average News , chart, profile, more Last: 11,168.31+73.88+0.67%
4:30pm 05/31/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 11,168.31, +73.88, +0.7%) rose 73.88 points Wednesday to 11,168.31. Of the 30 Dow stocks, 27 participated in the upside move. Check performance of Dow stocks. The blue-chip benchmark index fell 1.8% in May. The Nasdaq Composite ($COMPQ : Nasdaq Composite Index News , chart, profile, more Last: 2,178.88+14.14+0.65%
12:19am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 2,178.88, +14.14, +0.7%) rose 14.14 points to 2,178.88. For May, the tech-rich index tumbled 6.2%, its worst May performance since May 2000, when it shed 11.9%. The S&P 500 Index (SPX : S&P 500 Index News , chart, profile, more Last: 1,270.09+10.25+0.81%
1:06am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 1,270.09, +10.25, +0.8%) gained 10.25 points to end the day at 1,270.09. The broad gauge fell 3.1% in May, its poorest May showing since May 1984, when it fell 5.9%. "It's been a weak month because investors know that the biggest risk to a bull market is that the Fed will be seduced into raising short-term interest rates too high and ending the bull market and ending the recovery," said Hugh Johnson, chairman of Johnson Illington Advisors. "Investors are very worried that the Federal Reserve is making that age-old mistake." In Wednesday's trading action, stocks moved higher even as Federal Reserve officials expressed rising concern over inflationary pressures in the economy. "From time to time, when stocks are declining, there will be recoveries that will be referred to as oversold bounces or trading rallies," said Johnson. "What's more important is the primary trend, not what happens on any given day." At their policy meeting earlier this month, the U.S. central bankers appeared to have been very worried about rising prices and expectations among consumers that prices will rise further, according to a summary of their meeting released Wednesday afternoon. 'It's been a weak month because investors know that the biggest risk to a bull market is that the Fed will be seduced into raising short-term interest rates too high and ending the bull market and ending the recovery.' — Hugh Johnson, Johnson Illington Advisor According to the summary, Fed officials even debated whether to increase the fed-funds rate by 50 basis points at the meeting; there was also discussion about leaving policy unchanged. At that meeting, the central bank raised its fed-funds rate by a quarter-point for a 16th straight time to 5%. Read the full story. The federal-funds futures market priced in a higher chance of a June rate hike Wednesday. The odds rose to 72% from 56% earlier. The Federal Open Market Committee, the Fed's interest-rate-setting body, meets over two days starting June 29. The odds of a further rate hike by year-end rose slightly but remained below 20%. Earlier, stocks rose to their highs for the session after Secretary of State Condoleezza Rice said the U.S. would be willing to join European talks over Iran's nuclear program. Rice, however, made clear that Iran must suspend enrichment processing before the U.S. would participate in any negotiations. On the broader market for equities, advancers outpaced decliners 3 to 1 on the New York Stock Exchange, and 19 to 10 on the Nasdaq. Volume was reasonably heavy with 1.98 billion shares traded on the Big Board, while 2.18 billion shares exchanged hands on the Nasdaq. By sector, airlines (XX:$XAL: news, chart, profile) rallied on the drop in crude. Semiconductors ($SOX : phlx semiconductor index sox News , chart, profile, more Last: 464.74+8.07+1.77%
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 238.97, -0.20, -0.1%) all posted modest declines. Ahead of the release of the FOMC minutes, investors got good news on the health of the economy. Business activity expanded in the Chicago region for the 37th consecutive month in May, the National Association of Purchasing Managers-Chicago said. The purchasing managers' index rose to 61.5% from 57.2% in April, much stronger than the expected decline to 56.2%.
That was the highest level since October. Anything over 50% indicates growth. The prices-paid index, an inflation gauge, fell to 76.9% from 77.2%. See full story. Strength in the economy, however, is something of a double-edged sword for the markets as it raises fears that robust growth will stoke inflationary pressures, prompting the Fed to keep raising rates. Other markets Crude-oil futures ended down 74 cents at $71.29 a barrel, on hopes of easing tensions with Iran, a major oil exporter, and as the Organization of the Petroleum Exporting Countries appeared unlikely to cut its output quota at its gathering in Venezuela. See Commodities Corner. On the month, oil is down 3%. Gold futures ended down after a three-session run. The benchmark contract fell $11.50 to $649 an ounce. For May, the precious metal dipped 1.8%. See Metals Stocks. The U.S. dollar initially moved little on the FOMC minutes, but gathered strength in late-day trading on the prospect of higher rates. The euro was off 0.4% at $1.2808. Against the yen, the greenback rose 0.3% to 112.61. See Currencies. Treasury prices ended lower, sending yield higher as the strong manufacturing data and the FOMC minutes did little to dissuade fixed-income traders from the notion that further rate increases are on the way. The benchmark 10-year Treasury note was down 9/32 at 100-2/32 with a yield ($TNX : CBOE 10-Year Treasury Yield Index News , chart, profile, more Last: 51.13+0.27+0.53%
1:06am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 51.13, +0.27, +0.5%) of 5.11%. See Bond Report. Stocks on the move The retail sector remained a focus after Wal-Mart's 2.7% decline Tuesday. Recent weak consumer-confidence surveys have fed fears about a consumer slowdown. Fellow retailer Costco Wholesale Corp. (COST : costco whsl corp new com News , chart, profile, more Last: 52.93-0.63-1.18%
7:01am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 52.93, -0.63, -1.2%) fell 1.2% to $52.93. The company reported third-quarter net income of 49 cents a share, a penny below analysts' projections. The pharmaceutical and biotech sector was also in the spotlight following the Food and Drug Administration clearing Omnitrope, a hormone used to treat growth disorders. Novartis' (NOV : national oilwell varco inc com News , chart, profile, more Last: 66.06+1.61+2.50%
4:15am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 66.06, +1.61, +2.5%) Sandoz, the maker of Omnitrope, said the case establishes a precedent to allow generic biotechnology drugs. The FDA issued a statement, however, specifically denying that Omnitrope is a generic biologic. Pfizer Inc.'s stock (PFE : Pfizer Inc News , chart, profile, more Last: 23.66+0.08+0.34%
4:15am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 23.66, +0.08, +0.3%) benefited as the company makes a similar hormone. U.S.-listed shares of Novartis rose 2.5% to $66.06, while shares of blue-chip component Pfizer tacked on 8 cents to $23.66. Broker action Shares of Research In Motion (RIMM : research in motion ltd com News , chart, profile, more Last: 64.89+0.09+0.14%
7:02am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 64.89, +0.09, +0.1%) rose 9 cents to $64.89 after J.P. Morgan upgraded the maker of the BlackBerry handheld device, citing valuation and positive catalysts for the company. EBay Inc. shares (EBAY : ebay inc com News , chart, profile, more Last: 32.81-0.40-1.20%
7:01am 06/01/2006
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: 32.81, -0.40, -1.2%) traded down 1.2% to $32.81 after Merrill Lynch slashed the online auctioneer's price target to $44 from $51. Mark Cotton is a reporter for MarketWatch in New York.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)