GL: Stocks edge up before home sales data, Fed meeting
NEW YORK (AP) — Investors are proceeding cautiously after Monday's big selloff.
Stocks are mixed early trading Tuesday ahead of the National Association of Realtors' report on existing home sales in May. Economists surveyed by Thomson Reuters predict a 2.8 percent increase, which would be a sign the troubled housing market is starting to mend.
The market's moves were modest following the Dow's 201-point loss Monday — the worst daily drop in more than two months.
Later Tuesday, the Federal Reserve begins its two-day meeting on monetary policy. The Fed is widely expected to keep its key rate near zero, but investors are unsure how optimistic the policy makers will be in their economic assessment Wednesday — and whether the central bank will consider raising rates later this year to curb inflation.
Another cause for caution is the Treasury Department's afternoon auction of $60 billion in two-year notes. Any evidence that demand for government debt is waning could give investors a scare. Treasury demand needs to stay strong for the government to finance its bailout and stimulus programs without significantly raising yields; Treasury yields affect borrowing rates for consumers.
In early trading, the Dow Jones industrial average slipped 5.90, or 0.1 percent, to 8,333.11. The Standard & Poor's 500 index rose 1.42, or 0.2 percent, to 894.46, and the Nasdaq composite index rose 1.22, or 0.1 percent, to 1,767.41.
The stock market rallied sharply between early March and early June, but has given up some ground over the past several days.
The recent selloff, however, has brought very little volatility, and that's a positive sign, said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York.
"The fact is, you can't keep going straight up," Fullman said. "There's a chance we'll still see some downward movement in the next week or two — the market really needs a correction. But, it's sort of healthy."
Government bond prices dipped in early trading ahead of the afternoon auction. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.73 percent from 3.69 percent late Monday.
After tumbling on Monday, the price of crude oil rose 31 cents to $67.81 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies. Gold prices rose.
Overseas, Japan's Nikkei stock average sank 2.8 percent. In afternoon trading, Britain's FTSE 100 rose 2.6 percent, Germany's DAX index rose 0.7 percent, and France's CAC-40 rose 0.2 percent.
