US stocks surge ahead of Fed meeting
NEW YORK—US stocks Tuesday rose decisively as investors bet that the Federal Reserve will stay the course the next day on its economic stimulus policy.
The Dow Jones Industrial Average surged 138.38 (0.91 percent) higher to 15,318.23.
Tuesday’s session marked the sixth in a row that the Dow moved more than 100 points in a single session.
The broad-based S&P 500 jumped 12.77 (0.78 percent) to 1,651.81, while the tech-rich Nasdaq Composite Index rose 30.05 (0.87 percent) to 3,482.18.
The Federal Reserve’s policy panel Tuesday kicked off a two-day meeting that will culminate in a Wednesday policy statement and news conference with Federal Reserve Chairman Ben Bernanke.
Investors in recent weeks have speculated the Fed would soon taper its $85 billion-a-month bond-buying program.
But the market is now betting the Fed will pull back only in “the distant horizon,” said Art Hogan of Lazard Capital Markets.
Bernanke’s message will be that “things are getting better, but not enough so that we’re going to start tapering.”
Hogan predicted Bernanke would avoid laying out a time frame for scaling back the purchases.
Most of the companies in the Dow rose. The biggest gainers were General Electric (up 2.4 percent) and UnitedHealth Group (up 2.0 percent).
Dell rose 0.5 percent to $13.48 after Carl Icahn called on the company to purchase a majority of outstanding shares for $14 per share in his latest effort to block founder Michael Dell’s go-private plan. Dell has offered $13.65 per share.
Irish biotechnology company Elan’s US-traded shares rose 2.2 percent after US intellectual property investor Royalty Pharma abandoned a bid to acquire it.
US shares of Sony Corp. shot up 3.3 percent after the electronics giant said it would consider spinning off its entertainment division in response to pressure from hedge fund Third Point. Third Point upped its stake in Sony to 6.9 percent from 6.5 percent.
Bond prices were mixed. The yield on the 10-year US Treasury edged up to 2.18 percent from 2.17 percent late Monday, while the 30-year slipped to 3.34 percent from 3.35 percent. Bond prices move inversely to yields.