Stocks look to war, ignore Fed
Posted: Tue Mar 18, 2003 3:51 pm
Stocks look to war, ignore Fed
Markets focus on Iraq, shrug off central bank's decision to leave rates unchanged.
March 18, 2003: 3:31 PM EST
NEW YORK (CNN/Money) - U.S. stocks remained mired in war worries Tuesday afternoon, as investors opted for inaction in the wake of an expected Federal Reserve decision to leave short-term interest rates unchanged ahead of a likely war against Iraq by the end of the week.
At about 3:20 p.m. ET the Dow Jones industrial average (up 11.07 to 8152.99, Charts), the Nasdaq composite (down 1.99 to 1390.28, Charts) and the S&P 500 index (down 1.22 to 861.57, Charts) all hovered near breakeven, after having traded on both sides of unchanged throughout the session.
"Everyone knew that they (the Fed) wasn't going to tighten or ease," said Matthew Ruane, head of listed trading at Gerard Klauer Mattison. "The only thing disconcerting to investors was that they had no guidance going forward because of the uncertainty about the war. You saw bonds sell off nearly a point on those comments."
Amid the war focus, stocks showed only a brief reaction to what would have been the day's major news event: the Federal Reserve policy meeting. As had been widely anticipated, the central bank kept its target for the fed funds rate at the current historically low 1.25 percent. However, when describing its "bias," or view on the direction of the economy, the Fed cited "unusually large uncertainties" related to the geopolitical climate, as well as disappointment with the health of the U.S. labor market.
The Fed said it would exercise "heightened surveillance" of the economy, possibly a hint it's willing to cut rates before its next meeting, scheduled for May 6.
"Investors got some reassurance from Bush giving a deadline last night, but once the war passes, we still have to deal with the economy and the same fundamental issues that have been keeping markets sidelined for months," Ruane said.
Markets focus on Iraq, shrug off central bank's decision to leave rates unchanged.
March 18, 2003: 3:31 PM EST
NEW YORK (CNN/Money) - U.S. stocks remained mired in war worries Tuesday afternoon, as investors opted for inaction in the wake of an expected Federal Reserve decision to leave short-term interest rates unchanged ahead of a likely war against Iraq by the end of the week.
At about 3:20 p.m. ET the Dow Jones industrial average (up 11.07 to 8152.99, Charts), the Nasdaq composite (down 1.99 to 1390.28, Charts) and the S&P 500 index (down 1.22 to 861.57, Charts) all hovered near breakeven, after having traded on both sides of unchanged throughout the session.
"Everyone knew that they (the Fed) wasn't going to tighten or ease," said Matthew Ruane, head of listed trading at Gerard Klauer Mattison. "The only thing disconcerting to investors was that they had no guidance going forward because of the uncertainty about the war. You saw bonds sell off nearly a point on those comments."
Amid the war focus, stocks showed only a brief reaction to what would have been the day's major news event: the Federal Reserve policy meeting. As had been widely anticipated, the central bank kept its target for the fed funds rate at the current historically low 1.25 percent. However, when describing its "bias," or view on the direction of the economy, the Fed cited "unusually large uncertainties" related to the geopolitical climate, as well as disappointment with the health of the U.S. labor market.
The Fed said it would exercise "heightened surveillance" of the economy, possibly a hint it's willing to cut rates before its next meeting, scheduled for May 6.
"Investors got some reassurance from Bush giving a deadline last night, but once the war passes, we still have to deal with the economy and the same fundamental issues that have been keeping markets sidelined for months," Ruane said.