By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. equity investors bid up prices on
Tuesday ahead of the Federal Reserve's two-day policy meeting,
driving the S&P 500 and the Nasdaq Composite into positive
territory.
Federal Reserve officials are widely expected to announce the
end to the 2008-era bond-buying stimulus program, while leaving the
language on the statement broadly dovish. That generally means the
central bank would be quick to signal a prolonged period of low
rates, if the economy proves dicey.
The Nasdaq Composite (RIXF) outperformed the main benchmark,
rising 78.36 points, or 1.8%, to 4,564.29.
The S&P 500 (SPX) rose 23.42 points, or 1.2%, to 1,985.05,
turning October into a perfect V-shaped recovery. Broad-based gains
were led by the energy and industrials sectors, which recovered
some of the steep losses from Monday.
The Dow Jones Industrial Average (DJI) jumped 187.8 points, or
1.1%, to 17,005.75, closing above the 17,000 level for the first
time since Oct 3.
The resurgence of the stock market comes on the heels of one of
the more tumultuous months in trading, which was characterized by
wild triple-digit gains and losses early in October. Now what
started out as a month of brutal carnage for stocks is beginning to
look like a renaissance even as the U.S. central bank appears ready
to put an end to its six-year long, bond-buying stimulus
program.
Read: What to make of this roller-coaster stock market
Throw 'em a bone: "Markets are trading into the [Federal Open
Market Committee] statement later this week, expecting an end to
quantitating easing, but dovish wording (they basically expect the
FOMC to throw them a bone)," said Wouter Sturkenboom, strategist at
Russell Investments in London, in emailed comments.
A decision after the two-day FOMC meeting comes Wednesday.
Investors did not dwell on mixed bag of economic reports, giving
them a broad pass. U.S. consumers have regained confidence in the
short-term outlook for the economy and labor market, and are more
optimistic about their future earnings potential, according to the
latest data from the Conference Board.
Orders for U.S. durable goods fell in September for the second
month in a row as demand waned for a variety of products including
autos, aircraft, computers and heavy machinery. The up-and-down
airline category was a chief culprit, with orders sinking 16.1%
after a 74% drop in August and a whopping 315% spike in July. Read:
Businesses step up investment. Will it last?
U.S. home prices nudged up by less than forecast in August,
according to S&P/Case-Shiller's 20-city composite index
released Tuesday.
Stocks to watch:
Tesla Motors Inc. shares rallied 9.5% after the company unveiled
a new leasing deal over the weekend. The Wall Street Journal
reported the deal was aimed at stemming a decline in U.S. sales,
and Elon Musk, the electric car manufacturer's chief executive,
took to Twitter to deny that sales were down.
Kohl's shares slid 6.6% after it warned its full-year results
will come in at the low end of its previously issued guidance.
AutoNation Inc. shares rallied 6.9% after it reported
third-quarter results that topped expectations.
Twitter Inc.(TWTR) was hit by downgrades from several analysts
on Tuesday, leading shares to drop 9.8%. The social-media company
disappointed investors after its fourth-quarter revenue forecast
came slightly under analysts' expectations, and growth in new users
slowed in the third quarter.
Apple Inc.(AAPL) shares rose 1.6% after Alibaba Group Holding
Ltd.'s (BABA) chief executive officer Jack Ma said he was
interested in cooperating with the iPhone maker on financial
payments. Alibaba shares jumped 1.9%.
Madison Square Garden Co.(MSGNV) shares jumped 11% after the
company said late Monday that it was exploring the possibility of
splitting into two publicly traded companies to unlock value in its
sports franchises.
(Read more about the day's notable stocks in Movers &
Shakers column:
http://www.marketwatch.com/story/facebook-coach-pfizer-earnings-in-focus-2014-10-28.)
Other markets: European stocks were on the rebound Tuesday, with
the German DAX 30 index rallying 1.9%. Stocks in China surged, with
the Hong Kong Hang Seng Index up 1.6%. Oil prices (CLZ4) were
taking a breather after a sharp drop on Monday. Gold prices (GCZ4)
were lackluster, as was the dollar (DXY).
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