Stocks seesaw, edge lower at close
NEW YORK — U.S. stock indexes closed slightly lower Wednesday, stabilizing a day after their biggest sell-off in two months.
The Dow Jones industrial average fell 27.55 points, or 0.2 percent, to close at 17,635.39. The Standard & Poor’s 500 index lost 3.92 points, or 0.2 percent, to 2,040.24. Both indexes are down about 1 percent in 2015.
The Nasdaq composite fell 9.85 points, or 0.2 percent, to 4,849.94. The Nasdaq is up 2.4 percent this year.
With no obvious catalyst pushing them either way, the major indexes spent most of the day wavering between slight gains and losses. Investors are waiting for clues from a Federal Reserve meeting next Wednesday as to when it may start increasing interest rates. The prospect of higher rates and a surge in the dollar have been weighing on markets since indexes hit record highs last week.
Stocks rose at the opening of trading. The losses at the end were tiny, and energy and financial companies managed to rally.
“Investors are reassessing whether yesterday’s selloff made sense,” said David Lefkowitz, senior stock strategist at UBS. “We still like stocks.”
The odds of the Fed raising rates appeared to rise Friday after the U.S. government reported a burst in hiring last month. A rate increase would be the first in nine years. Low rates and other monetary stimulus have helped the S&P 500 to triple in price since the bull market began six years ago.
A U.S. interest rate rise would come as Japan and Europe are struggling to grow and as China’s expansion slows. On Wednesday, China’s official Xinhua news agency reported output in the world’s secondbiggest economy rose 6.8 percent in the first two months of the year, less than expected. China is expected to slow further after growing 7.4 percent last year, the slowest rate in nearly a quarter-century.
“You have three out of four major drivers of economic growth still struggling,” said Bill Strazzullo, chief market strategist at Bell Curve Trading. “Can the U.S. go it alone, especially with rates heading higher?”
Strazzullo said he wouldn’t be surprised if the S&P 500 fell 10 percent in the coming months.
Lefkowitz is more optimistic. He said he doesn’t think higher interest rates will hurt the U.S. economy because it has been steadily strengthening. After Tuesday’s stock market tumble, he published a report showing that in the six months after initial Fed rate increases going back to 1954, the S&P 500 has rallied an average 7.6 percent.
David Lebovitz, Global Market Strategist for J.P. Morgan Asset Management, also thinks interest rate fears are overblown. “I think a couple of months after the Fed hikes, the market will be higher,” he said.
The prospect of higher rates attracts money to the U.S. from investors seeking higher returns, pushing up the value of the dollar. The dollar has been rallying against several currencies.
The price of U.S. oil fell slightly. Benchmark U.S. crude fell 12 cents to close at $48.17 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $1.15 to close at $57.54 a barrel in London.