Tue, March 16, 2010
Business > Markets

US stocks rise ahead of Federal Reserve rate decision

2010-03-16 15:50:05 GMT2010-03-16 23:50:05 (Beijing Time)  SINA.com

NEW YORK – Stocks are higher while investors await results from the Federal Reserve's meeting on interest rates.

Policymakers are almost certain to keep the Fed's benchmark rate at a historic low of near zero Tuesday. Investors will be focused on the Fed's statement on the economy. The central bank is expected to make its announcement at 2:15 p.m. EDT.

Stocks are also higher after the Standard & Poor's credit rating agency signed off on Greece's plan to reduce its budget deficit.

At midday, the Dow Jones industrial average is up 32 at 10,675. The Standard & Poor's 500 index is up 6 at 1,157. The Nasdaq composite index is up 12 at 2,374.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) — Stocks climbed Tuesday while investors awaited results from the Federal Reserve's meeting on interest rates.

Policymakers are almost certain to keep the Fed's benchmark rate at a historic low of near zero, so investors will be focused on the Fed's statement on the economy. The central bank is expected to make its announcement at 2:15 p.m. EDT.

As the economy improves the Fed will need to start increasing interest rates to fend off inflation. Investors will pore over the Fed's statement for clues about when rates might change. The Fed has repeatedly said inflation is not an immediate problem, and it plans to keep rates low for an "extended period."

Any change in the language that indicates the Fed will raise rates sooner rather than later could touch off selling in the stock market. Higher rates could raise borrowing costs and be a drag on the economy.

"I think rates will stay lower longer than people expect," said Dan Dolan, director of Wealth Management Strategies at Select Sector SPDRs in Garden City, N.Y.

The stock market has been carving modest gains for more than a month. Major stock indexes stand at or near their best levels in more than a year. Investors are looking for signs that the recovery is strong enough to justify the steep rebound in stocks in the past 12 months.

In late morning trading, the Dow Jones industrial average rose 32.65, or 0.3 percent, to 10,674.80. The Standard & Poor's 500 index rose 6.03, or 0.5 percent, to 1,156.54, while the Nasdaq composite index rose 11.62, or 0.5 percent, to 2,373.83.

Major stock indexes ended narrowly mixed Monday after investors took a cautious approach ahead of the Fed's meeting.

Bond prices were mixed Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.68 percent from 3.70 percent late Monday.

The dollar fell against other major currencies, while gold prices rose.

Crude oil rose $2.01 to $81.81 per barrel on the New York Mercantile Exchange as the dollar fell. A weaker dollar makes commodities less expensive to foreign buyers.

In other trading, European markets gained after the 16 countries that share the euro agreed to help Greece with loans if the debt-burdened country requires assistance.

The Commerce Department said construction of homes fell 5.9 percent last month to a seasonally adjusted annual rate of 575,000 units. That was slightly better than the rate of 570,000 units economists polled by Thomson Reuters predicted.

January activity was revised higher to a pace of 622,000 units,the best showing in 14 months.

Applications for new permits fell to an annual rate of 612,000. Economists had forecast a drop to 610,000. Applications are considered a good sign of future housing activity.

Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 267.1 million shares compared with 263.1 million shares traded at the same point Monday.

The Russell 2000 index of smaller companies rose 2.10, or 0.3 percent, to 676.51.

In afternoon trading, Britain's FTSE 100 rose 0.4 percent, Germany's DAX index gained 0.7 percent, and France's CAC-40 rose 0.8 percent. Earlier, Japan's Nikkei stock average fell 0.3 percent.

(Agencies)

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