U.S. stocks trip a tiny bit as world markets regain footing
NEW YORK -- U.S. stocks closed fractionally Monday after the Federal Reserve and other central banks added more cash to their banking systems, helping investors set aside some concerns about credit tightness.
The New York Fed, which carries out the central bank's market operation, minutes after the opening bell announced $2 billion in overnight repurchase agreements.
The Fed's "repo" followed a move by the Bank of Japan to put $5 billion into the markets and an addition by the European Central Bank of $65.3 billion; the ECB added more than $200 billion last week. The moves, following similar injections by the Fed last week, appeared to placate Wall Street for now and allowed it to look ahead to a week of fresh economic data. Since Thursday, the Fed has added $62 billion in liquidity.
Monday's injection, however, was smaller than normal, perhaps reassuring some investors that the central bank doesn't yet feel the need to pump more liquidity into the market. The last time the Fed repurchased as little as $2 billion in one day was on April 18. It made a one-day repo of $1.5 billion on May 10, but that was preceded by a separate one-day repo of $5.0 billion earlier that same day.
Indeed, the central bank moves seem to be calming a market that has been torn by volatility for weeks.
"The environment we're in is really truly extraordinary. The best way for investors to view this is from a 30,000-foot view — to be positioned defensively and to continue to pay close attention to the U.S. economy and the consumer," said J. Michael Barron, chief executive of Knott Capital in Exton, Pa.
At the close of trading, the Dow Jones industrial average was off 4.14, or 0.03%, at 13,235.40.
The Standard & Poor's 500 index fell 0.72, or 0.1%, to 1452.92, and the Nasdaq composite index lost 2.65, or 0.1%, to 2542.24.
After enduring sharp swings to the downside last week, the Dow Jones industrials and other major indexes ultimately finished the week with a modest gain. Last week's trading showed that the most predictable thing about the markets lately is high volatility.
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