WESTON, Fla., June 21, 2004 (PRIMEZONE) -- Investors are doing all they can to help stocks climb their way off the lows of the last two months, consolidating the gains they have forged over the past year and a half. But continuing concerns over the situation in the Middle East and Iraq continued to weigh on investors. Most recently, news that Iran seized three British ships and eight sailors did its part to unnerve market participants. The Nasdaq Composite was up 25.28 points, to 1,994.43, while the Dow Jones industrial average was higher by 45.42 points, to 10,388.87.
Crude oil futures eased back below $42 per barrel in the past couple of weeks, after scaring analysts into thinking they might pop above $45. The price of crude oil rose after the U.S.-appointed head of the Iraqi Governing Council, Ezzedine Salim, was killed near the U.S. headquarters in Baghdad, and with continued troubles in the U.S.'s efforts in Iraq. Also damaging investor confidence were Commerce Department figures showing the U.S. trade deficit recently widened by 9.1 percent to a record $46 billion, much higher than what analysts were expecting.
Stocks in the news include networking leader Nortel Networks (NYSE:NT), which has been moving up since late last week on speculation that it met with executives of Cisco Systems (Nasdaq:CSCO) regarding a potential partnership.
Intel (Nasdaq:INTC) got some help from a few analysts, who made positive comments on the chip giant, and helped give a lift to semiconductor stocks in general.
Also, some news regarding merger and acquisition activity helped buoy stocks, and financial issues in particular, as Wachovia (NYSE:WB) announced a $14.3 billion purchase of SouthTrust.
The latest Federal Open Market Committee meeting was held on Tuesday, May 4, 2004, where the FOMC changed its tune somewhat, saying in its statement that, "The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."
In plain terms The Fed is saying that conditions have improved to the point that rates can start moving up from their current historically low levels, but will probably do so at a measured, and even pace - no 50 and 75 basis point hikes in the near future. The Fed also said it, "continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity." Regardless, many analysts are saying the first rate increase may come as early as June.
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