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BUSINESSTuesday 15 March 2016
US stocks end nearly unchanged
ahead of Fed meeting outlook for economy is awaited
MARLEY JAY
AP Markets Writer
NEW YORK (AP) — U.S.
stocks barely budged
Monday, finishing mixed as
lower oil prices pulled ener- U.S. stocks missed out on a
gy companies down while
hotels and travel-related
Trader Luke Scanlon, left, works on the floor of the New York Stock Exchange, Friday, March 11,
2016. Stocks are opening broadly higher on Wall Street following a rally in Europe and an upturn
in energy prices.
companies rose.
Trading was quiet Monday
ahead of the Federal Re-
serve’s meeting later this
week, which is expected
to shed some light on the
possibility of a future in-
crease in benchmark inter-
est rates.
“Lately (the market) seems
to quiet down ahead of
the Fed,” said BlackRock
portfolio manager Peter
Stournaras.
global rally that lifted stocks Last year Marriott Interna-
in Europe and Asia. The
Standard & Poor’s 500 fell
for just the second time this
month. The Dow Jones in-
dustrial average rose 15.82
points, or 0.1 percent, to
17,229.13. The S&P 500 lost
2.55 points, or 0.1 percent,
to 2,019.64. The Nasdaq
composite index gained
With no rate hike foreseen, Fed
1.81 points to 4,750.28. M. CRUTSINGER
Starwood Hotels jumped AP Economics Writer
after a consortium led by WASHINGTON (AP) — The financial world is awaiting
China’s Anbang Insurance the Federal Reserve’s response to a critical question:
Group offered to buy the How stable are the world’s economies and financial
hotel chain for $14 billion. markets?
Whatever picture the Fed sketches will help shape
tional agreed to buy Star- expectations of when it will resume the interest rate
increases it began in December. That’s when the Fed
raised its key rate from record lows to reflect an econ-
omy finally strong enough 6½ years after the Great
Recession ended to withstand higher loan rates.
Yet in the ensuing weeks, stocks and oil prices tum-
(AP Photo/Richard Drew) bled and China struggled to manage a sharp slow-
down. Now, with investors having regained some of
wood for $12.2 billion. Star- their losses, with the U.S. job market improving and
wood said it will examine major overseas economies still-weak but stable, the
the new offer and its stock Fed may be inching closer to raising rates again.
gained $5.51, or 7.8 per- Just not yet.
cent, to $75.93. Most Fed watchers think the central bank wants more
Marriott stock rose $2.04, or time to assess the financial landscape. Resuming its
3 percent, to $70.93. It will rate hikes too soon could slow growth or rattle inves-
get a $400 million payment tors again. In a policy statement and a news con-
if Starwood backs out of ference Chair Janet Yellen will give after its latest
their agreement. meeting ends Wednesday, the Fed will likely nod to
The news lifted other trav- improvements since it met in January but also stress
el-related companies. Tri- uncertainties that still loom.
pAdvisor gained $2.84, or “Financial markets have stabilized a bit, but the situa-
4.5 percent, to $66.54 and tion abroad still looks worse than in the United States,”
Expedia rose $1.46, or 1.3 said Diane Swonk, chief economist of DS Economics.
percent, to $116.39. “The Fed will give some signals that they feel better
C. Patrick Scholes, ana- about where things are now compared to January
lyst for SunTrust Robinson but also signal that they don’t have an itchy trigger
Humphrey, said investors finger in terms of raising rates.”
in Expedia and TripAdvisor The Fed has two mandates: To maximize employment
are hoping Starwood will and keep prices stable. It has essentially met just one:
be sold to Anbang instead In February, the United States added a robust 242,000
of competitor Marriott. He jobs — roughly the monthly average for the past six
said if Marriott and Star- months. And the unemployment rate is a low 4.9 per-
wood were to combine, cent, close to the rate the Fed associates with full em-
they would have more ployment.
power to negotiate lower But inflation has been stuck below the Fed’s 2 per-
commissions with the online cent target rate for nearly four years. Too-low inflation
travel agencies. “If there’s tends to lead people to postpone purchases, which
no deal, that strength and slows consumer spending, the economy’s main fuel.
bargaining power is taken Subpar inflation also makes the inflation-adjusted cost
away,” he said. q of loans more expensive.
Before further raising rates, the Fed wants to see more
evidence that inflation is picking up. Its preferred infla-
tion gauge did rise in January to a 12-month increase
of 1.3 percent, faster than the scant 0.7 rise over the
12-month period that ended in December. But that’s
still well below the Fed’s target.
Recent comments from Fed officials indicate that
they differ on how to interpret inflation prospects.
Vice Chairman Stanley Fischer said last week that the
Fed may “be seeing the first stirrings of an increase in
the inflation rate — something that we would like to
see.”
Fischer suggested that two factors that have been
depressing inflation — lower oil prices and a strong
dollar, which reduces import prices — may be starting
to wane.
But another Fed board member, Lael Brainard, said
last week that she saw “troubling indications” that in-
flation could dip again. She also said she worried that
weakness in China, Japan and other places could
slow the U.S. economy.
In December, when the Fed raised rates for the first
time in nearly a decade, it signaled the likelihood of
four additional hikes in 2016. q