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Without guidance, stocks still rise a bit

NEW YORK - Stocks eked out a gain for the fourth straight day Thursday after tepid housing start and jobless claims reports gave investors few clues about the direction of the economy and interest rates.

Investors were hoping for a hint of how the Federal Reserve, which meets this month, will formulate its monetary policy for the coming months. But Thursday's economic reports gave the market little guidance.

"Investors are parsing every bit of economic data for an indication that the Fed is willing to step aside" and end its yearlong streak of rate hikes, said Joseph Keating, chief investment officer at AmSouth Asset Management.

According to preliminary calculations, the Dow Jones Industrial Average rose 12.28, or 0.12 percent, to 10,578.65 after moving in and out of positive territory for much of the session. The Dow also inched higher the first three days of the week - an indication that investors, while uninspired by the economic data, are finding few reasons for a big selloff.

Broader stock indicators also closed narrowly higher. The Standard & Poor's 500 Index rose 4.35, or 0.36 percent, to 1,210.93.

The Nasdaq Composite Index closed up 14.23, or 0.69 percent, at 2,089.15.

A report from the Philadelphia Federal Reserve that its regional economy was contracting sent stocks down temporarily. Philadelphia area manufacturers saw activity fall in June, the first negative reading in 25 months, according to the weak report.

Stocks are likely to trade in a narrow range until the June 29 and 30 meeting of the Fed's policymakers. The Fed is expected to raise short-term interest rates for the ninth time when it meets next, continuing the rate hikes that began last year.

The market's focus will be the Fed's accompanying assessment of the economy; investors are looking for signs that the string of rate hikes is coming to an end.

While Wall Street's conventional wisdom is that rate hikes will end with the Fed's August meeting, some analysts say rate hikes, and the attendant sideways movement that has characterized stocks for the past 17 months, will continue.

"The market is too high, short-term interest rates are too low and long-term interest rates are really low," said Linda Duessel, market strategist and senior portfolio manager at Federated Investors in Pittsburgh.

Economically sensitive stocks, including raw materials producers, were among the market's best performers Thursday.

"Commodity stocks, which were left for dead two weeks ago, have turned the corner, which indicates that the economy isn't going in the Dumpster like a lot of people think," said Gary Kaltbaum, an independent money manager in Orlando.

[Last modified June 17, 2005, 00:34:18]