Fed speculation fuels stock gains; Dow rises 100 points
NEW YORK — The stock market rose on Tuesday as investors waited to find out when the Federal Reserve might raise interest rates.
Stocks flitted between gains and losses through most of the morning, then turned broadly higher in the afternoon with big gains in health care and utility stocks.
Until the closing minutes, the Dow Jones industrial average looked like it would rise to a record, but prices faltered at the end. Still the blue-chip index ended up gaining 100.83, its first triple-digit gain since Aug. 18. The Dow closed at 17,131.97, up 0.6 percent.
The Nasdaq composite rose 33.86 points, or 0.8 percent, to 4,552.76. The Standard & Poor's 500 index climbed 14.85 points, or 0.8 percent, to 1,998.98.
“The economy continues to improve in the U.S., and there's still an accommodative Fed,” said Brad Sorensen, director of market and sector research at the Schwab Center for Financial Research. “We think the bull market has further to run.”
The Fed has held a key short-term interest rate close to zero for more than five years, making it cheaper for companies and consumers to borrow and boosting corporate profits. That has helped push stocks higher. But investors widely expect the Fed to start raising rates in the middle of next year.
Investors may get a better sense of how soon when the central bank concludes a two-day meeting on Wednesday. Fed Chair Janet Yellen could discuss the bank's rate plans, as well as the outlook for employment and inflation, in a press conference in the afternoon.
Jonathan D. Corpina, senior managing partner at Meridian Equity Partners, said there was talk among traders during the day about what the Fed might do, but little new insight.
“There' a lot of chatter, but nothing that's real,” he said from the floor of the New York Stock Exchange.
Among the 10 sectors of the S&P 500, health care stocks gained the most, up 1.3 percent. Utilities and energy stocks followed, with a 1.2 percent gain each. Energy stocks were pushed higher by rising oil prices. Exxon Mobil increased 1.2 percent.
In economic news, a measure of prices that U.S. producers receive for their goods and services was unchanged in August, the latest sign that inflation is in check. A drop in wholesale gas and food prices was offset by higher prices for transportation and shipping services, the Labor Department said.
Besides the Fed news conference on Wednesday, investors are awaiting a referendum on Scottish independence on Thursday. The British pound has turned volatile in recent weeks as opinion polls narrowed ahead of the vote. A “yes” decision could trigger turmoil in the market as investors ponder the economic and financial fallout.