By Kristina Peterson U.S. stocks pared earlier gains Friday as investors tread lightly ahead of U.S. elections Tuesday and the Federal Reserve meeting which concludes Wednesday. The Dow Jones Industrial Average (DJI) rose 52 points, or 0.5%, to 11171. Technology companies gained after the Semiconductor Industry Association said global chip sales rose 2.9% in September from a month earlier. Intel (INTC) climbed 1.8%, while Microsoft (MSFT) gained 1.2% and Hewlett-Packard (HPQ) rose 1%. Traders' focus is locked on events later this week, including the results of Tuesday's midterm elections and Wednesday's conclusion of a meeting of the U.S. Federal Reserve's policy-making committee. The stock market has rallied since early September and on Friday the Standard & Poor's 500-share (SPX) index wrapped up its best October performance since 2003, largely on expectations that the Fed will resume purchasing bonds in order to stimulate the economy. Still, the market moved higher Monday after a round of better-than-expected economic reports on a day investors expected would show little movement ahead of such significant events. The market's climb is likely a response to encouraging Chinese manufacturing data, a stronger-than-expected reading of October manufacturing activity from the Institute of Supply Management and an unexpected rise in construction spending. "Generally with an election tomorrow you'd have almost nothing happening in the market today," said Jennifer Ellison, principal at Bingham, Osborn & Scarborough. "Regardless of who wins tomorrow or what the Fed does, if we don't have corporate earnings growth and don't have people going back to work, the market's not going to continue going up at the pace it has been," she said. Others are worrying that the high level of anticipation going into the week's events could lead to disappointment if the size or scope of the Fed's expected announcement fails to match the market's expectations. While an immediate selloff is possible, "any kind of correction and or pause is going to be short and shallow," said Jeff Saut, chief investment strategist at Raymond James. "There are still going to be very good earnings comparisons coming up." The Nasdaq Composite (RIXF) gained 0.2% to 2512. The S&P 500 rose 0.5% to 1190, led by its energy and financial sectors. Boosting energy stocks, Baker Hughes (BHI) surged 4.8% after its third-quarter earnings soared as the oilfield-services company benefited from a rebound in North America, a seasonal recovery in Canada and the April acquisition of BJ Services. Cabot Oil & Gas (COG) rose 5.5%, while Range Resources gained 5.1%. Adding to hopes for global economic growth, two measures of Chinese manufacturing data unexpectedly increased. A set of data from HSBC showed one of the biggest month-on-month increases since the index was launched in 2004. In corporate news, Ambac Financial Group (ABK) tumbled 38% after the bond insurer warned that its board declined to make an interest payment and said it is negotiating plans for a prepackaged bankruptcy proceeding with senior debtholders. If it can't reach an agreement for such a plan, it plans to file for Chapter 11 bankruptcy protection by the end of the year. EXCO Resources (XCO) jumped 31% after Chairman and Chief Executive Douglas Miller offered to buy the company, valuing it at about $4.4 billion. The company's board said it intends to establish a special committee of independent directors to consider the proposal. Wilmington Trust (WL) sank 42% after it announced a merger with M&T Bank for a stock deal valued at about $351 million. The Delaware banker also reported its third-quarter loss widened sharply as its loan-loss provisions soared and as its mounting losses required it to establish a "significant" tax-valuation allowance. Shares of M&T Bank (MTB) gained 3.5%. Among stocks reporting earnings, Corning (GLW) rose 1.2% after its third-quarter profit jumped 22%, boosted by higher sales and margins, though its results just missed analysts' expectations. Corning, one of the leading providers of glass used in LCD screens for electronics, said it expects glass prices to fall slightly in the fourth quarter due to ample supply. Humana (HUM) firmed 0.8% after its third-quarter profit rose 30% as revenue rose on increases in enrollment. Humana, one of the nation's biggest providers of privately-run Medicare Advantage health plans for seniors, also lifted its outlook for the year. The U.S. dollar strengthened against both the euro and the yen. The euro was recently trading at $1.3882, down from $1.3947 late Friday in New York. Demand for Treasurys slipped, pushing the 10-year note's yield (UST10Y) up to 2.64%. Crude-oil prices rose above $83 a barrel, while gold futures declined. Crude-oil prices rose above $83 a barrel, while gold futures declined.
