Kitsap Business and Economy

Dow now up 27 points, landing at 10,416.

NEW YORK (AP) — Stock indexes edged higher Monday as investors tried to predict when interest rates might start rising.
Commodities including gold and oil fell, while Treasury prices rebounded from a slide last week.
The dollar slipped against other currencies ahead of comments from Federal Reserve Chairman Ben Bernanke, who is scheduled to speak at an afternoon gathering of the Economic Club of Washington.
Bernanke has said that the Fed plans to keep rates low for the foreseeable future, but investors believe that as the economy improves the central bank might move to raise rates and withdraw other measures to boost the economy including low-interest loans to big banks. That could reverse the dollar’s months-long slide and put a dent in the stock market’s advance.
Concerns about the Fed’s next move have heightened since Friday, when investors got one of the best indications yet that the economy is strengthening. The Labor Department said employers cut fewer jobs in November than at any time since the recession began at the end of 2007. Also, the unemployment rate dropped to 10 percent from a 26-year high of 10.2 percent.
Stocks had jumped after Friday’s employment report, but gave up most of their early gains as expectations of a possible rate hike grew and the dollar rose. Some analysts say the market overreacted in predicting that interest rates were due to rise, however.
“We have a slowly recovering economy,” said Robert MacIntosh, chief economist at Eaton Vance Management. “I don’t think you need to worry about the Fed changing their mind and raising rates anytime soon.”
In midday trading, the Dow Jones industrial average rose 27.89, or 0.3 percent, to 10,416.79. The Standard & Poor’s 500 index rose 1.16, or 0.1 percent, to 1,107.14, while the Nasdaq composite index rose 0.49, or less than 0.1 percent, to 2,194.84.
The ICE Futures US dollar index slipped 0.2 percent. Gold prices fell, and oil dropped 87 cents to $74.60 a barrel on the New York Mercantile Exchange.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.44 percent from 3.48 percent late Friday.
On Friday, the Dow rose just 23 points, after having been up as much as 151 points early in the day. All major stock indexes finished the week higher.
Low interest rates and the resulting slide in the dollar have helped fuel the stock market’s advance since March. The weak dollar has encouraged investors to buy stocks, commodities and other higher-yielding assets. If the Fed were to raise rates, that would be a good sign that the economy is strengthening. However, investors could curb their buying of stocks and look for ways to make more money elsewhere as rates rise.
A stronger dollar could also hurt companies that produce commodities and have large international operations. Those companies make more money when the dollar is weak and overseas sales are translated into greenbacks. A weaker dollar also makes their goods and services cheaper for foreign buyers.
Stocks are likely to drift as investors await more details from the Fed, which will host its last policy meeting of the year next week. Reports on international trade, business inventories and retail sales are among this week’s economic data.
In other trading, the Russell 2000 index of smaller companies rose 1.18, or 0.2 percent, to 603.97.
Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 383.9 million shares compared with 645.7 million shares traded at the same point Friday.
Overseas, Japan’s Nikkei stock average rose 1.5 percent, while Hong Kong’s Hang Seng index slipped 0.8 percent. Britain’s FTSE 100 fell 0.2 percent, Germany’s DAX index fell 0.6 percent, and France’s CAC-40 rose 0.2 percent.

This entry was posted on Monday, December 7th, 2009 at 10:11 am by Rachel Pritchett and is filed under Uncatagorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.