By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- The U .S. equity market vacillated in
and out of positive territory on Tuesday as investors awaited
signals from the Fed about its future monetary leaning.
The Federal Open Market Committee's two-day policy meeting,
which began Tuesday morning, may offer the clearest insight yet as
to wether the U.S. central bank will dial up rates sooner than
expected. Many worry that policy makers may raise key interest
rates as early as the second half of the year. Also read: Eight
keys to Fed's September meeting
The S&P 500 (SPX) was 2 points higher at 1,986.41. The Dow
Jones Industrial Average (DJI) was flat at 17,026.36. The Nasdaq
Composite (RIXF) ticked up 2 points to 4,521.13.
Follow today's stock market coverage on our live blog.
Joe Bell, senior equity analyst at Schaeffer's Investment
Research, pointed out that the market has not seen dramatic
selloffs and consolidation is logical after a strong rally in
August.
"Markets are pricing in the beginning of interest-rate hikes at
spring-summer of 2015 and whether it will be in April or August
does not make much difference, Bell said.
In economic news, producer prices were flat in August thanks to
falling gasoline and food costs, another sign that inflationary
pressure is receding. It was the lowest reading in the producer
price index since December, the Labor Department reported.
Global Head of Asset Allocation at Societe Generale Alain
Bokobza and his team advised investors to "switch out of expensive,
illiquid and over-owned assets" like small-cap stocks and into
large-cap equities in Europe and the U.S. "As the Fed continues to
normalize its monetary policy, small caps are at risk of a large
correction," he wrote. Read Need to Know: A dearth of deep-value
plays
Data compiled by Bloomberg News showed 47% of stocks in the
Nasdaq Composite are down at least 20% from their peak in the past
12 months, and more than 40% of Russell 2000 (RUT) companies have
fallen by as much. Meanwhile, the S&P 500 index has logged 33
new closing highs this year, and fewer than 6% of companies have
entered what is considered bear-market territory, Bloomberg
reported Monday.and
Stocks to watch: Majesco Entertainment Co. (COOL) fell 17% after
a similar drop late Monday when the video-game maker posted a
larger-than-expected third-quarter loss.
Wynn Resorts Ltd. (WYNN) dropped 2.2%, falling for a third
trading session amid declining revenue concerns from its properties
in Macau. However, Nomura analyst Harry Curtis noted that Wynn's
recent drop has made it a fair value at current prices.
Humana Inc. (HUM) shares rallied 2.8% after the health insurance
company unveiled a $2 billion buyback program that will replace its
current share repurchase program.
Tesla Motors Inc. (TSLA) rose 1.5% recouping some of the sharp
losses Monday when a Morgan Stanley argued that the electric-car
maker's stock is overvalued. Trip Chowdhry at Global Equities
Research, however, advised in a note Tuesday that investors buy
Tesla on weakness, reiterating an overweight rating and a
12-to-18-month price target of $385. (Read more about the day's
notable movers here:
http://www.marketwatch.com/story/adobe-factset-earnings-in-spotlight-2014-09-16.)
Other markets:Asian stocks largely fell. China's largest
wireless carrier China Mobile Ltd. tumbled 3.8% at the close, after
reports said the release date for iPhone 6 in mainland China is
still uncertain. China data also showed that in August foreign
direct investment fell to a four-year low. This followed weak
factory data released over the weekend.
Worries about this week's Scottish referendum continued to dull
markets, also weighing some on U.S. stock futures and a
disappointing German economic sentiment survey further put pressure
on European stocks .
Among currencies, the Russian ruble (USDRUB) continued to fall
against the U.S. dollar, off another 1% as sanctions worries
weighed. Gold(GCZ4) prices lost ground.(RUT)
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