While trading activity was somewhat subdued, stocks moved mostly higher over the course of the trading day on Tuesday. The gains on the day extended the upward move shown by the markets throughout most of September.
The major averages all closed in positive territory, although the tech-heavy Nasdaq outperformed its counterparts. While the Nasdaq advanced 27.85 points or 0.8 percent to 3,745.70, the Dow edged up 34.95 points or 0.2 percent to 15,529.73 and the S&P 500 rose 7.16 points or 0.4 percent to 1,704.76.
With the gains on the day, the Dow and the S&P 500 reached their best closing levels in over a month, while the Nasdaq set a nearly thirteen-year closing high.
The strength on Wall Street partly reflected the recent upward momentum for the markets, which has lifted the major averages well off the lows set in late August.
However, some traders seemed content to sit on the sidelines amid uncertainty about the outcome of the Federal Reserve's monetary policy meeting.
The Fed's two-day meeting got underway today, although the policy statement and Fed Chairman Ben Bernanke's accompanying press conference are not due until tomorrow afternoon.
Many economists expect the Fed to announce plans to begin scaling back its asset purchase program, although there is some debate about the size of the taper.
Paul Dales, senior economist at Capital Economics, said, "The absence of any major news articles quoting unnamed Fed sources in the last week suggests that the decision on whether to taper QE3 at today's FOMC meeting is so close that officials aren't willing to nudge the markets in one direction or the other."
"We expect a small cut in the pace of monthly asset purchases, from $85 billion to $75 billion," he added. "We wouldn't be surprised to see the Fed also emphasize that interest rates will remain low for a long time, perhaps via the publication of its interest rate forecasts for 2016 for the first time."
On the economic front, the Labor Department released a report before the start of trading showing a modest increase in U.S. consumer prices in the month of August.
The Labor Department said its consumer price index inched up by 0.1 percent in August following a 0.2 percent increase in July. Economists had expected prices to rise by about 0.2 percent.
The core consumer price index, which excludes food and energy prices, also edged up by 0.1 percent in August after rising by 0.2 percent in the previous month.
A separate report from the National Association of Home Builders showed that homebuilder confidence remained unchanged in September.
The report said the NAHB/Wells Fargo Housing Market Index came in at 58 in September, unchanged from August's downwardly revised reading. The index is hovering at its best levels in almost eight years.
Gold stocks showed a strong move to the upside over the course of the trading day, driving the NYSE Arca Gold Bugs Index up by 1.8 percent. With the gain, the index climbed further off the one-month closing low it set last Thursday.
The strength among gold stocks came despite a decrease by the price of the precious metal, with gold for December delivery ending the day down $8.40 at $1,309.40 an ounce.
Considerable strength was also visible among airline stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Airline Index. The gain extended a recent upward trend by the index, which reached its best closing level in over six years.
Healthcare provider, defense, and networking stocks also saw notable strength, while most of the major sectors ended the day showing only modest moves.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. While Japan's Nikkei 225 Index ended the day down by 0.7 percent, Australia's All Ordinaries Index edged up by 0.1 percent.
Meanwhile, the major European markets all moved to the downside. The U.K.'s FTSE 100 Index fell by 0.8 percent, while the French CAC 40 Index and the German DAX Index both dipped by 0.2 percent.
In the bond market, treasuries moved modestly higher, extending the upward trend seen over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.1 basis points to 2.853 percent.
Trading activity on Wednesday may be somewhat subdued in the lead up to the announcement from the Fed, which is due at about 2 pm ET.
In light of the focus on the Fed, traders are not likely to pay much attention to the Commerce Department's monthly report on housing starts.
by RTT Staff Writer
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