US stocks rise ahead of expected Fed taper
In this Monday, Sept. 16, 2013, file photo, specialist Frank Masiello works on the floor of the New York Stock Exchange. US stocks Tuesday closed higher amid greater investor confidence that the US economy could withstand an expected reduction of Federal Reserve bond purchases. AP
NEW YORK CITY—US stocks Tuesday closed higher amid greater investor confidence that the US economy could withstand an expected reduction of Federal Reserve bond purchases.
The Dow Jones Industrial Average put on 34.95 (0.23 percent) at 15,529.73.
The broad-based S&P 500 added 7.16 (0.42 percent) at 1,704.76.
The tech-rich Nasdaq Composite Index jumped 27.85 (0.75 percent) to 3,745.70, its highest close since September 2000.
A two-day meeting of the Federal Open Market Committee is scheduled to conclude Wednesday with a statement and news conference with Federal Reserve Chairman Ben Bernanke. Most market watchers expect the Fed to scale back the Fed’s $85 billion per month bond-buying program.
The market expects the Fed to reduce the program by $10-$15 billion, said Michael James, managing director of equity trading at Wedbush Securities.
A larger taper “might cause a little bit of market weakness,” James said. “Anything else is priced in.”
“People are getting more comfortable with the Fed taking their foot off the pedal,” James said. “We’re not expanding at a fantastic rate, but we’re doing okay.”
Technology companies performed strongly with Apple and Facebook reversing recent declines. Apple added 1.2 percent and Facebook advanced 6.0 percent.
Other technology firms to see gains included Dow member Intel, up 1.5 percent after a Credit Suisse upgrade, and Amazon, up 2.7 percent.
Dow component Microsoft rose 0.4 percent after raising its dividend by 22 percent and announcing a new $40 billion share buyback program to replace a program that expires at the end of September.
Banking giant JPMorgan Chase slipped 0.1 percent after The Wall Street Journal reported the bank may face criminal charges over the “London whale” trading losses. The bank is reportedly close to settling civil charges in the matter with US and British regulators.
Safeway soared 10.5 percent after activist fund Jana Partners disclosed that it took a 6.2 percent stake in the supermarket chain. The company enacted a so-called “poison pill” measure intended to prevent a hostile takeover.
Internet radio company Pandora rose 5.0 percent after announcing a public offering of 10 million additional shares. The proceeds will go to general corporate purposes and potential acquisitions.
Bond prices rose. The yield on the 10-year Treasury dropped to 2.85 percent from 2.87 percent, while the 30-year slipped to 3.84 percent from 3.87 percent. Prices and yields move inversely.
