Wall Street today took another look at the Federal Reserve's decision to put off raising interest rates and still couldn't get excited about it.
Despite a report showing unexpectedly strong growth in the service sector of the economy, stocks struggled for the second session in a row. The Dow Jones industrial average slipped 6 points to 10,310.95. The Nasdaq Stock Market composite index, however, rose 7 points to 1,957.26. The Standard & Poor's 500 stock index gained 2 points to 1,121.58.
Traders saw more of the contrasting evidence about the economy that has motivated the Fed to prepare the public for higher interest rates, but to hold off actually raising them.
The monthly evaluation of the health of service companies by the Institute for Supply Management showed a surprising improvement rather than the slight deterioration that economists had expected. The institute's service sector index jumped from 65.8 to 68.4 and the group reported business is improving in 16 of the 17 business sectors tracked by the survey.
But at the same time, the auto business is so week that Ford and Chrysler were forced today to introduce yet another round of incentives to spur sales of trucks, vans and sport utility vehicles. Not only are overall sales not as strong as Detroit had hoped, but the domestic makers are -- for the first time -- losing truck sales to Toyota and Nissan.
So far truck-sales figures show no hint that higher gasoline prices are turning off consumers, but that could change as gasoline prices keep climbing.
Today on the New York Mercantile Exchange, crude oil prices knocked on the door of $40 a barrel -- hitting $39.70 -- and gasoline futures hit record highs for the seventh day in a row -- topping $1.30 a gallon.
Those prices are for oil and gasoline to be delivered next month, so they forecast what's coming to local gas pumps.
Energy economists say prices continue to climb not only because of tight supplies, but also because demand is so strong. Despite complaints about $2 a gallon gas, consumers keep buying it and they keep buying gas guzzling vehicles that swallow $50 worth of fuel at a time.
Only when gasoline get high enough to pinch demand will market forces begin to hold down prices, the economists point out. By the time gas prices get that high, the pinch could affect not only gas stations but also the entire economy.