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Investors buy modestly, await word of Fed

| Tuesday, June 18, 2013, 8:15 p.m.

NEW YORK — It's all about the Fed. Still.

Stocks moved higher on Tuesday, helped by news of a pickup in home building and low inflation. But the Federal Reserve loomed large, with investors trying to guess what the central bank will say on Wednesday about how long it plans to keep stimulus programs in place. For many, the market was in a holding pattern as investors waited for the announcement.

The market's gains were steady and broad. The Standard & Poor's 500 index rose 12.77 points, or 0.8 percent, to 1,651.81. All 10 of its sectors rose, led by industrial and telecommunications companies. The Russell 2000, an index of smaller companies, closed at a high just shy of the 1,000-point milestone.

The Dow Jones industrial average rose 138.38 points, or 0.9 percent, to 15,318.23. The Nasdaq composite index rose 30.05 points, or 0.9 percent, to 3,482.18.

The day's wait-and-see vibe came from a familiar template. The Fed has had an outsized effect on the stock market in recent weeks, with the major indexes getting yanked back and forth as investors try to guess how long the central bank will keep supporting the economy.

Some investors say it's troubling that the market is relying more on the central bank for direction than on economic fundamentals. The latest turning point was May 22, when Fed Chairman Ben Bernanke startled markets by announcing that the central bank could soon pull back on its bond-buying program if the economy improves.

“Here we are again,” said Gregg Fisher, founder and chief investment officer of Gerstein Fisher, a financial advisory firm in New York. “We don't know what the actions will be. We're all trying to figure that out.”

The Commerce Department reported that the pace of home building increased in May, helped by more buyers coming to the market and a scarcity of houses for sale. Investors described the report as good enough to send the market up, but not good enough for the Fed to think the economy is healthy enough to abruptly slash its stimulus efforts.

The Labor Department reported that consumer prices rose last month, but only slightly. That's likely to influence the Fed's decisions. The Fed knows that its stimulus programs can lead to inflation. If inflation is in check, however, that gives the Fed more leeway to continue the programs.

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