Dow, S&P flat, Nasdaq slips waiting for Fed

MARKETS-USA-STOCKS:Dow, S&P flat, Nasdaq slips waiting for Fed

new York  September 11, 2012, 2:33 IST

new York  09 11, 2012, 02:40 IST

 

The Dow and S&P 500 were little changed on Monday while the Nasdaq slipped, as investors took profits mostly in the technology sector ahead of possible policy action from the Federal Reserve later in the week.

The benchmark S&P 500 index rose 2.2 percent last week to hit highs not seen in nearly five years, and traders were eyeing the 1,440 level on the S&P as the next barrier to further gains.

Whether the S&P gets there could depend largely on the Federal Reserve, which may say on Thursday whether it will engage in more bond-buying to keep interest rates low. Previous efforts at stimulating the economy have bolstered buying in stocks.

"There is a huge potential for a tremendous rally," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Genuity. "And if we get to 1,440, that's what everybody is looking for. Everybody is looking at whether (Fed Chairman Ben) Bernanke institutes QE3."

Expectations for more stimulus measures from the U.S. Federal Reserve and the European Central Bank have underpinned the markets in recent weeks. Friday's disappointing U.S. jobs data further boosted those expectations.

Investors are also awaiting a ruling on Wednesday by Germany's constitutional court on the legality of the euro zone's permanent financial rescue fund, which could derail plans by the European Central Bank for substantial buying of short-term debt.

After the Nasdaq hit a 12-year high last week, investors did some selling of big-cap tech names that have done well all year. Worse-than-expected data on imports from China was a factor in the selling in that sector.

"Today there is a little pull back, a little profit-taking in technology after last week," said Gary Wedbush, head of trading at regional investment bank Wedbush Morgan in Los Angeles. "I would use it as a buying opportunity."

Intel Corp lost more 3 percent, and shares of Apple Inc , the world's largest publicly traded company by market value, lost more than 1 percent.

The Dow Jones industrial average was up 2.79 points, or 0.02 percent, at 13,309.43. The Standard & Poor's 500 Index was down 1.46 points, or 0.10 percent, at 1,436.46. The Nasdaq Composite Index was down 14.04 points, or 0.45 percent, at 3,122.39.

American International Group Inc shed 1.7 percent to $33.38 after the U.S. Treasury Department said it will sell most of its stake in the insurer, making the government a minority investor for the first time since it rescued the company in the depths of the financial crisis four years ago.

Chinese import data showed a fall of 2.6 percent on the year in August, short of expectations for a 3.5 percent rise. Exports grew 2.7 percent, below forecasts for a 3 percent rise in a Reuters poll.

The data increased the odds of more Beijing-backed spending to deal with the damage done to the domestic economy by firms cutting production, inventories and imports due to weak global demand.

Plains Exploration & Production Co said it will buy BP Plc's stake in some deepwater Gulf of Mexico wells for $5.55 billion to boost its oil production. U.S.-listed shares of BP edge d up 0.2 percent to $42 and Plains Exploration slumped 8.4 percent to $36.94.

Titan Machinery Inc shares dropped 20.38 percent to $20.20 after the farm equipment retailer cut its full-year profit forecast after it reported a lower-than-expected quarterly profit as the worst drought in 56 years in the U.S. Midwest hit prices of tractors and combines.

(Editing by Dave Zimmerman)