By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rose for a second day in a
row Tuesday, with the S&P 500 ending just shy of all-time highs
as worries faded that Russia's annexation of Ukraine's Crimea
region would lead to further near-term military conflict.
The S&P 500 (SPX) added 13.42 points, or 0.7%, to close at
1,872.25, just 0.3% off its all-time closing high of 1,878.04 set
earlier in the month.
The Dow Jones Industrial Average (DJI) advanced 88.97 points, or
0.5%, to 16,336.19, around 1.5% off its all-time closing high from
Dec. 31. Microsoft Corp. (MSFT) led Dow gainers and a broad tech
rally, jumping 3.9% to finish at its highest level since 2000 on
reports its Office suite of software will soon be available on
Apple Inc.'s (AAPL) mobile devices.
With tech stocks surging, the Nasdaq Composite (RIXF) jumped
53.36 points, or 1.2%, to 4,333.31.
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Markets rallied on Monday after the European and U.S. sanctions
were limited to visa bans and asset freezes. Tuesday's annexation
of Crimea, which happened without a prospect of a full-blown
invasion, eased investors' fears and allowed them to focus on
fundamentals.
Russia's President Vladimir Putin on Tuesday signed a treaty to
annex Crimea after an overwhelming majority of its citizens on
Sunday voted to leave Ukraine. In his prepared remarks, Putin also
said he does not want to partition Ukraine. While that seemed to
cheer investors, there were plenty of skeptics who argued that the
prospects of further Eastern European turmoil can't be
dismissed.
"Of course, when it comes to Vlad the Crimean Impaler, it is all
about what he does, not what he says," said Joel Naroff, economist
at Naroff Economic Advisors in Holland, Pa., in a note. "Still,
investors like soothing tones, so any time he tries to make nice,
markets will likely stabilize."
As the events in Russia and Ukraine stole the show, reaction to
a pair of economic reports that were in line with expectations was
muted. Investors shifted their attention to the Federal Reserve's
two-day policy-setting meeting set to conclude Wednesday.
The Fed will release a policy statement and updated economic
forecasts on Wednesday afternoon. Chairwoman Yellen is due to hold
a news conference after the meeting, the first to be led by her.
Analysts expect the Fed will roll out a new low-rate pledge and
further tapering of its monthly bond-buying program.
In economic news, construction on new U.S. homes fell slightly
in February, but in a sign that work will pick up as the weather
warms, builders filed more permits to start new projects -- mainly
on multi-dwelling units like condos and apartments. The previous
months' number was revised higher. Also: Spotlight on the economy:
Is housing construction about to warm up?
Ian Shepherdson, chief economist at Pantheon Macroeconomics
wrote housing starts numbers "could have been worse, but
single-family permits numbers are worrying."
"The not-so-good news is that all the increase in permits in
February was in the volatile multi-family component, while
single-family fell for the third straight month to their lowest
level since Jan 13. The trend here is clearly downwards, and SF
starts are even weaker," he said in a note.
Consumer prices in the U.S. rose slightly in February because of
higher food and housing costs, but overall inflation remained
quiet, according to the latest government figures.
Among individual stocks, Hewlett-Packard (HPQ) jumped 3.9% after
Barclays upgraded the stock to overweight from equal weight.
Barclays analyst Ben Reitzes said H-P "could gain share for several
quarters" in the low-end server business at the expense of Lenovo
which has acquired IBM Corp.'s X86 server business.
GameStop Corp. (GME) shares dropped 3.4% after Wal-Mart Stores
Inc. (WMT) said it would allow customers to hand in used videogames
in exchange for gift cards, which can be used in its retail stores
or online. The change in policy from Wal-Mart Stores could eat away
at GameStop's dominance of the $2 billion used videogame market in
the U.S.
Shares of FutureFuel Corp.(FF) rose nearly 18% as the biofuels
company late Monday reported a more-than-fourfold jump in profit.
Hertz, Adobe, Oracle are stocks to watch Tuesday.
Coach Inc. (COH) shares rose 1.6% after Barclays initiated
coverage of the stock with 'equalweight' rating.
Oracle Corp. (ORCL) gained 1.6% in regular trading but fell more
than 5% in after-hours action after reporting weaker-than-expected
fiscal third-quarter results.
In other markets, gold (GCJ4) fell on Tuesday in volatile
trading as investors looked ahead to the Fed meeting. Gold lost
ground Monday as investors put money back into stocks. The dollar
fell versus the Japanese yen (USDJPY), also reversing some of the
previous day's moves. Oil prices (CLJ4) rose.
European stocks gained ground rising 0.6%. The Nikkei 225 index
largely tracked Wall Street gains from Monday, with that index
gaining close to 1%. The Shanghai Composite Index was flat.
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