US stocks waver ahead of Fed meeting

NEW YORK (AP) ? Disparate signs on the economy and corporate earnings left the stock market struggling for direction early Wednesday.

For every hint that the economy was improving, another cropped up to indicate that it isn't. Construction was up; manufacturing, down. Car sales were strong ? until wait, they weren't.

The Standard & Poor's 500 index rose slightly in the opening minutes of trading, then trimmed its gains steadily for 45 minutes, dipping into the red briefly. Shortly after 11 a.m., major stock indexes were in a holding pattern, with the S&P 500 and the Dow Jones industrial average up slightly and the Nasdaq composite index down. The biggest percentage change was in the Dow, and that was a mere 0.3 percent.

"We have a couple of positives," said Zahid Siddique, portfolio manager at Gamco in Rye, N.Y., "offset by a couple of negatives."

Traders were also puzzled by unusually sharp moves in a number of stocks shortly after the opening bell. The New York Stock Exchange said it was reviewing trades in 148 stocks in the first 45 minutes of trading. Trading volume was unusually high in the first half-hour of trading.

Investors are hoping that the Federal Reserve will step in with a measure of clarity by afternoon. But it's almost a perverse equation, that has some investors hoping for a poor read on the economy.

The Fed will wrap up a two-day policy meeting in the afternoon and issue a statement afterward that will include its latest assessment of the economy. If it thinks the economy is weakening, it's more likely to spend more government money trying to revive it ? and that is what many investors are hoping for.

Another key development that could influence the markets comes Thursday, when the European Central Bank meets. Investors are anxious to know if European leaders have some concrete plan to tame the continent's debt crisis, or merely good intentions. U.S. stocks climbed at the end of last week after key European leaders, including ECB President Mario Draghi, promised to do "whatever it takes" to preserve the union of the 17 countries that use the euro. But enthusiasm waned by Monday and Tuesday, and stocks fizzled.

The spate of news on U.S. companies and the economy was mixed.

Chrysler, Volkswagen and Nissan reported strong sales in July, but General Motors and Ford faltered. Harley-Davidson sank 10 percent, losing $4.27 to $38.96, after missing sales expectations.

The cable company Comcast jumped 4 percent, rising $1.28 to $33.83, after beating second-quarter earnings expectations. Avon lost 22 cents to $15.27 after missing expectations for both earnings and sales, and JCPenney tumbled 6 percent, losing $1.35 to $21.16.

The government reported that the U.S. construction spending rose for the third straight month. But at the same time, the Institute for Supply Management trade group reported that manufacturing shrank for the second straight month.

Though the construction news was positive, Siddique was underwhelmed. Construction spending grew 0.4 percent in June, according to the government, not enough to offset problems in other parts of the economy, he said. "It's nothing to write home about," Siddique said.

By late morning, the Dow was up 20 points to 13,029. The S&P 500 was down two to 1,381. The Nasdaq composite slipped three to 2,936.

Another key development comes on Friday, when the U.S. government reports the number of jobs added in July. Payroll provider ADP reported its own calculations before the market opened Wednesday, calculating that U.S. businesses added 163,000 jobs in July, much more than the 120,000 analysts had been expecting.

That sent stock index futures up before the market opened. It also pushed up the yield on U.S. government bonds. The interest rate on the 10-year Treasury note rose to 1.50 percent from 1.47 percent late Tuesday. A rising Treasury yield is a sign that investors are moving money into stocks.

Many investors are waiting until the government reports its own calculations on Friday before drawing firm conclusions on jobs. The ADP data tracks only private-sector hiring, and can sometimes vary sharply from the government's report.

Source: http://news.yahoo.com/us-stocks-waver-ahead-fed-meeting-142248617--business.html

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