Stocks Flat After Fed Holds Steady

Stock indexes finished Thursday's session almost unchanged after the Federal Reserve, finishing a two-day meeting, decided to hold interest rates steady.

An eagerly awaited statement from the Federal Reserve Open Market Committee made few changes. The Fed statement said economic growth was "moderate" during the first half of the year and expects the economy to "expand at a moderate pace over coming quarters."

Core inflation "improved modestly in recent months," the Fed statement said. But, "a sustained moderation in inflation pressures has yet to be convincingly demonstrated."

Markets also digested new economic data and a batch of earnings news, several from retailers.

In the first quarter, the U.S. gross domestic product grew at 0.7%, according to final figures released Thursday. That's revised up from 0.6%. Price data was also revised higher, with personal comsumption expenditures, a measure of the price of consumer goods and services, raised to 2.4% from 2.2% previously.

U.S. initial jobless claims fell 13,000 to 313,000 for the week ended June 23. The claims data were a little lower than expected, Action Economics says.

Despite some volatility after the statement was released, stock indexes ended the session almost exactly where they had started. The Dow Jones industrial average edged down 5.45 points, or 0.04%, to 13,422.28. The broader S&P 500 index was off 0.63 points, or 0.04%, to 1,505.71.

The tech-heavy Nasdaq Composite index was up 3.02 points, or 0.12%, to 2,608.37.

Stocks on the New York Stock Exchange were positive by a 19 to 14 ratio. On the Nasdaq exchange the ratio was 15 to 14.

In energy markets Thursday, oil moved back above $70 on worries about supplies, and then retreated. August WTI crude oil futures finished 60 cents higher at $69.57.

Among stocks in the news on Thursday, General Motors (GM) announced it would sell its Allison Transmission business for about $5.6 billion to the Carlyle Group and Onex. GM stock finished higher.

General Mills (GIS) fell after reporting earnings of 62 cents per share, vs. 61 cents a year ago on a 6.2% rise in sales. The firm sees fiscal 2008 earnings of $3.39 to $3.43 per share, a 7 to 8% increase over 2007.

Monsanto Co. (MON) reported earnings of $1.03 per share in its third quarter, vs. 60 cents a year ago. Sales rose 23% for the company, which expects increased use of its corn seeds globally. The stock was up on Thursday.

KB Home (KBH) moved lower after it reported a $1.93 per share loss in the second quarter, vs. earnings of $2.45 per share a year ago. Revenue for the homebuilder dropped 36%. The firms says there is an oversupply of housing inventory, with aggressive competition and weak demand.

Bed Bath & Beyond (BBBY) fell after reporting earnings of 38 cents in the first quarter, vs. 35 cents a year ago. Same-store sales rose 1.6%, and total sales were up 11%. The overall retail environment, especially for home merchandise, is challenging, the firm said.

Family Dollar Stores (FDO) was also lower after it reported earnings of 40 cents per share in the third quarter, vs. 37 cents a year ago. Same-store sales were up 1.5%, and total sales rose 5.4%.

Rite Aid Corp. (RAD) was up after it reported earnings of 4 cents per share in the first quarter, vs. 1 cents a year ago on a 2.3% rise in same-store sales and a 2.8% rise in total sales.

Novellus Systems (NVLS) said it expects weaking demand in the semiconductor equipment industry. It expects its second quarter results will be at the low end of guidance it previously offered. Semiconductor equipment stocks were down more than 1% on Thursday.

European stock markets moved higher on Thursday. In London, the FTSE 100 index was up 0.67% to 6,571.30. Germany's DAX index was 1.54% higher at 7,921.36. In Paris, the CAC 40 index was up 1.09% at 6,006.31.

Asian markets were also up outside mainland China. In Japan, the Nikkei index was up 0.46% to 17,932.27. In Hong Kong, the Hang Seng index moved up 1.07% to 21,938.22. In China, the volatile Shanghai Composite index plunged 4.03% to 3,914.2.
Source : http://www.businessweek.com