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Portfolio > Economy & Markets > Stocks

U.S. stocks fluctuate amid speculation on Fed interest rate move

By Inyoung Hwang and Joseph Ciolli

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(Bloomberg) — U.S. stocks fluctuated as investors weighed stronger-than-forecast gains in consumer prices and new-home sales for clues on when the Federal Reserve will raise interest rates.

Consumer staples extended gains to a third day as spice-maker McCormick & Co. climbed more than 4 percent. Raw-material companies fell after copper producer Freeport-McMoRan Inc. cut its dividend.

The Standard & Poor’s 500 Index rose less than 0.1 percent to 2,105.77. at 10:06 a.m. in New York. The Dow Jones Industrial Average advanced 13.38 points, or 0.1 percent, to 18,129.42.

“The market is looking for new direction, but it hasn’t seen it yet,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “That’s why we’re churning and trading in a pretty narrow range. The Fed looked like it was going to be more aggressive, but now seems to be less so.”

The cost of living in the U.S. excluding food and fuel rose more than forecast in February, reflecting broad-based gains that helped keep a floor under inflation.

Economic Data

The so-called core consumer-price index climbed 0.2 percent for a second month, a Labor Department report showed Tuesday in Washington. The median forecast of economists surveyed by Bloomberg called for a 0.1 percent increase. Prices overall also climbed 0.2 percent, the first advance in four months, as fuel costs stabilized.

Purchases of new homes in the U.S. unexpectedly rose in February to a seven-year high as stronger job gains helped bolster industry activity amid severe weather.

Sales climbed 7.8 percent to a 539,000 annualized pace, the most since February 2008, Commerce Department data showed Tuesday in Washington. The reading exceeded even the most optimistic forecast of economists surveyed by Bloomberg.

The S&P 500 and Dow have risen within 1 percent of records they reached on March 2 amid speculation the Fed won’t hasten an interest-rate increase.

Federal Reserve Bank of San Francisco President John Williams said in remarks prepared for delivery in Sydney Tuesday that a discussion should happen mid-year about tightening policy, even as he lowered his growth forecast.

Economists surveyed by Bloomberg forecast the world largest economy expanded at a rate of 2.2 percent in the first quarter and the pace to pick up to 3 percent in the second three months.

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