Stocks rally ahead of Fed meeting
NEW YORK – Wall Street advanced sharply Tuesday as the Federal Reserve opened a two-day meeting expected to bring another interest rate cut to revitalize the U.S. economy.
The Fed’s rate decision is clearly the market’s focus this week, and trading has been marked by investors’ conjectures about policymakers’ thoughts on the weak economy and crunched financial industry.
With an announcement not expected until this afternoon, the market in the meantime digested data on earnings, consumer spending and durable goods.
Investors did get some encouragement about the economy after the Commerce Department said orders for big-ticket items rose 5.2 percent in December, the widest jump in five months. In addition, the Conference Board reported consumer confidence fell in January – pretty much as expected.
Economic data will continue to be scrutinized as investors try to determine the Fed’s take on the economy. Investors are angling for a half-point cut following an emergency three-quarter-point cut last week.
The Dow Jones industrial average rose 96.41, or 0.78 percent, to 12,480.30. The blue chip index closed near its high of the day.
Broader indexes also rose. The Standard & Poor’s 500 index rose 8.34, or 0.62 percent, to 1,362.30, and the Nasdaq composite advanced 8.15, or 0.35 percent, to 2,358.06.
Wall Street has been volatile in recent weeks amid fears of a U.S. recession and further write-downs in the financial sector. However, that has given way to a more quiet tone this week as investors looked for their second straight day of gains before the Fed’s decision.
Central bankers are widely expected to lower the key rate, now at 3.5 percent, by as much as one-half percentage point to 3 percent when policymakers wrap up today.
This will be the last meeting for seven weeks, but that doesn’t rule out another emergency cut in the meantime.
In Asian trading, Tokyo’s Nikkei stock average closed up 2.99 percent; Shanghai’s key index added 0.87 percent; and Hong Kong’s main index rose 0.99 percent.
In European trading, London’s FTSE rose 1.66 percent; Frankfurt’s DAX rose 1.09 percent; and Paris’ CAC rose 1.92 percent.