US stocks rise ahead of Fed meeting

A spe­cial­ist works on the floor of the New York Stock Exchange Fri­day. Stocks slipped Mon­day, as trou­bling eco­nomic news from China and the U.S. out­weighed opti­mism about more stim­u­lus from the Fed­eral Reserve. (AP Photo/Richard Drew, File)

MATTHEW CRAFT

AP Busi­ness Writer

NEW YORK — Investors spent Tues­day prepar­ing for two events sure to move mar­kets this week: a Fed­eral Reserve meet­ing and a court deci­sion on whether Ger­many can help sup­port its strug­gling neigh­bors. And if the stock market’s gains Tues­day are any sign, they expect both events to turn out well.

The Dow Jones indus­trial aver­age rose 69.07 points to close at 13,323.36. The aver­age of 30 large com­pany stocks has already gained 1.8 per­cent to start Sep­tem­ber, a month which is usu­ally dis­mal for stocks.

Bank of Amer­ica led the 30 stocks in the Dow, ris­ing 5 per­cent, or 45 cents, to $9.03.

Fed­eral Reserve offi­cials will gather for a two-day meet­ing on Wednes­day. Many expect the Fed will announce a new effort to revive the slug­gish econ­omy Thurs­day afternoon.

On the same day the Fed starts its meet­ing, Germany’s high court is expected to rule on whether the coun­try can par­tic­i­pate in a Euro­pean bailout fund. The court rejected a last-minute appeal to delay the deci­sion on Tuesday.

“It’s going to get inter­est­ing this week,” said Randy Fred­er­ick, man­ag­ing direc­tor of active trad­ing and deriv­a­tives at the bro­ker­age Charles Schwab.

Fred­er­ick expects the Fed will make some sort of move, espe­cially after the gov­ern­ment reported last Fri­day that employ­ers added fewer than 100,000 jobs in August.

“Prior to the employ­ment report peo­ple weren’t as sure,” Fred­er­ick said. “I am def­i­nitely on the major­ity side here. There’s some sort of eas­ing coming.”

In other trad­ing, the Stan­dard & Poor’s 500 index rose 4.48 points to 1,433.56. The Nas­daq com­pos­ite increased 0.51 of a point to 3,104.53.

The assump­tion that the Fed will announce new stim­u­lus mea­sures is so wide­spread that some worry the mar­ket could take a plunge if the Fed fails to deliver.

Ron Flo­rance, man­ag­ing direc­tor of invest­ment strat­egy at Wells Fargo Pri­vate Bank in Scotts­dale, Ariz., said he’s always wary when stocks rise on noth­ing more than expectations.

“These are the things that make you ner­vous, when mar­kets are going strong in antic­i­pa­tion of news,” Flo­rance said.

On Tues­day, the Com­merce Depart­ment reported that exports to Europe dropped 11.7 per­cent in July, stok­ing con­cerns that Europe’s trou­bles could smother the U.S. recov­ery. Over­all U.S. exports fell 1 per­cent to $183.3 bil­lion, low­ered by weaker sales of autos, tele­com equip­ment and heavy machinery.

Mor­gan Stan­ley and Cit­i­group rose after the two banks set­tled a dis­pute over how much to value their jointly owned bro­ker­age firm, Mor­gan Stan­ley Smith Bar­ney. The deal cleared the way for Mor­gan Stan­ley to buy Citigroup’s stake. Citi gained 83 cents to $32.66. Mor­gan Stan­ley rose 64 cents to $17.25.

A profit warn­ing from lux­ury cloth­ing chain Burberry helped tug down other high-end retail­ers in early trad­ing. Burberry said slow­ing sales to China will likely weaken earn­ings. Ralph Lau­ren lost $4.09 to $156.22. Tiffany & Co. sank 78 cents to $62.26.

Among other stocks mak­ing moves:

— Legg Mason jumped 5 per­cent fol­low­ing reports that its CEO will step down Oct. 1. Clients have been pulling money out of the money manager’s funds, weak­en­ing rev­enue. Legg Mason’s stock surged $1.38 to $26.85.

— Hewlett-Packard gained 52 cents to $17.95, a 3 per­cent gain. The com­puter and printer maker said late Mon­day that it will cut 29,000 jobs by Octo­ber 2014, or 2,000 more than it had pre­vi­ously planned. Sales of per­sonal com­put­ers have slumped as peo­ple favor smart­phones and light­weight tablet computers.

Posted by AP News on Sep 11 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.