Fed, mortgage news buoys Wall Street
NEW YORK – Wall Street finished mixed in another seesaw session Wednesday after regulators allowed Fannie Mae and Freddie Mac to buy more mortgages and Federal Reserve Chairman Ben Bernanke said the central bank will remain vigilant about the weakened economy.
Investors pared the market’s gains after both developments had initially boosted confidence amid increasing signs of a slowing economy. Wall Street has in recent months grappled with concerns about rising prices, a weaker dollar and continued turmoil in the credit markets.
Bernanke indicated the Fed is more concerned about the sagging economy than the immediate risks of inflation. In testimony on Capitol Hill, he told lawmakers the Fed will “act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.”
The remarks came as the dollar plunged to a record low against the 15-nation euro. That sent already inflated oil and gold prices further into record high territory and raised the prospect of accelerating inflation.
Meanwhile, Fannie Mae and Freddie Mac – the biggest sources of financing for U.S. home loans – helped give the market some ballast after the government removed restrictions on the size of their portfolios. That offered a chance for an easing of the extremely tight mortgage market that has been battered by the subprime loan crisis.
Major indexes initially moved higher before investors cashed in profits, following a pattern set in recent weeks. The Dow Jones industrial average – now up four straight sessions – rose 9.36, or 0.07 percent, to 12,694.28.
Broader indexes were narrowly mixed. The Standard & Poor’s 500 index fell 1.27, or 0.09 percent, to 1,380.02, and the Nasdaq composite index rose 8.79, or 0.37 percent, to 2,353.78.
Stocks were somewhat under pressure after the euro climbed to a record high of $1.5057 as sentiment increased that the Fed would continue its rate cut campaign. The U.S. currency was mixed against other major currencies.
The dollar’s continued slide drove more money into commodities – especially into oil and gold.
Overseas, Japan’s Nikkei stock average closed 1.49 percent higher. Britain’s FTSE 100 fell 0.18 percent, Germany’s DAX index rose 0.17 percent, and France’s CAC-40 fell 0.09 percent.