March 29, 2024

Awaiting the Fed, Wall Street Rises

In afternoon trading, the Standard Poor’s 500-stock index gained 0.8 percent, the Dow Jones industrial average rose 0.9 percent and the Nasdaq Composite added 0.9 percent.

With the Fed expected to maintain the current level of bond purchases, shares of industrial, technology and consumer discretionary companies rallied. General Electric gained 1.8 percent and was among the most actively traded stocks on the New York Stock Exchange.

Traders are trying to anticipate the Fed’s timeline for winding down purchases of $85 billion per month of bonds, known as quantitative easing, that have underpinned the S.P. 500’s rally to all-time highs in May.

The expectation is that the Fed will change its rhetoric on tapering to ease the “hysteria” in the markets since talk that a change may be coming sooner than expected caught fire in May, said Peter Kenny, chief market strategist at Knight Capital in Jersey City.

“The volatility is absolutely 100 percent tied to the confluence of themes, the two themes being quantitative easing on the one hand and improving economic data on the other hand, which supports the removing of quantitative easing,” said Mr. Kenny.

The rally halted after the Fed chairman, Ben S. Bernanke, said on May 22 the Fed could begin to reduce its stimulus in the “next few meetings” if the economy gains momentum and inflation remains moderate. Intraday swings by stock indexes have widened, although the S.P. 500 closed on Monday less than 1 percent below the May 22 close.

Data showed United States housing starts rose less than expected in May but the overall trend remained consistent with strength in the housing market, while consumer prices rose giving the deflation-wary Fed some respite.

The Fed’s policy won’t show major changes after the meeting, according to Todd Salamone, director of research at Schaeffer’s Investment Research in Cincinnati.

“They won’t do anything in this meeting and I think the data supports that,” Mr. Salamone said. “We remain in a holding pattern until the policy statement is released” on Wednesday afternoon.

Boeing introduced a larger version of its flagship Dreamliner aircraft at the Paris Airshow on Tuesday, sharpening the battle with rival Airbus in the market for fuel-efficient, long-distance jets. Boeing shares were up 0.7 percent.

United States-traded shares of Sony rose 3.2 percent as a hedge fund, Third Point, said it has raised its stake in the company and urged its leadership to create an independent board to run a partially spun-off entertainment arm.

Shares of Hormel Foods, the meat processor, fell 4.6 percent after the company cut its full-year outlook.

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After a calmer session for Asian markets, European shares recovered from an early dip. The FTSEurofirst 300 index ended the session down 0.1 percent.

The pickup in European shares was aided by a rise in investor sentiment in Germany, suggesting Europe’s largest economy is on the slow road to recovery, but it was only a brief distraction ahead of the Fed.

Benchmark crude was slightly higher, up 25 cents to $98.02 a barrel.

Article source: http://www.nytimes.com/2013/06/19/business/daily-stock-market-activity.html?partner=rss&emc=rss

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