Wednesday, February 9, 2011

Markets brush aside Chinese rate hike

The Dow notched a seventh straight day of gains on Tuesday, but light volume suggested that investors don't believe the more than five-month rally has the legs to keep going.

Surprisingly strong sales by McDonald's boosted optimism on consumer spending and drove the Dow's gains on what turned out to be the quietest day of trading so far in 2011, with total volume about 17 percent below last year's daily average.

Weakness in energy shares limited gains in the S&P 500 and Nasdaq after China, the world's second-biggest energy consumer, raised interest rates for the second time in six weeks. The
move pressured commodities on fears of lower demand but had little market impact outside that sector.

"The rate hike is important, but it isn't at a critical level where it becomes troublesome," said Michael Mullaney, a portfolio manager who helps manage $9.5 billion at Fiduciary Trust Co in Boston. (more)

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