June 25, 2008
Markets Down; No Rate Change Expected
Wall Street ended an erratic session moderately lower Tuesday as concerns grew about the impact of high fuel costs on consumers and corporate profits. Treasury prices rose on the economic uncertainty.
Crude oil prices rose 26 cents to settle at $137 a barrel on the New York Mercantile Exchange .
Wall Street's overriding concern is that expensive energy will prevent the economy from growing and aggravate inflation at the same time. Given the anemic economy - not to mention the additional debt losses expected at the nation's biggest banks - the Federal Reserve has little wiggle room to combat inflation with higher interest rates. Policymakers, whose rate- setting meeting began Tuesday and concludes toda y, are anticipated to hold the key rate at 2 percent.
"The market has priced in no action from the Fed," said Jim Herrick, manager of equity trading at Baird & Co. "With the housing market the way it is, and the financial system feeling fragile ... I'd really be surprised if the Fed in this environment would consider raising rates in the near future."
Government bonds rose . The dollar fell against other major currencies, while gold prices rose.
Originally published by BY MADLEN READ.
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