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U.S. stocks rise ahead of Fed meeting
NEW YORK — Investors spent Tuesday preparing for two events sure to move markets this week: a Federal Reserve meeting and a court decision on whether Germany can help support its struggling neighbors. And if the stock market’s gains Tuesday are any sign, they expect both events to turn out well.
The Dow Jones industrial average rose 69.07 points to close at 13,323.36. The average of 30 large company stocks has already gained 1.8 percent to start September, a month which is usually dismal for stocks.
Bank of America led the 30 stocks in the Dow, rising 5 percent, or 45 cents, to $9.03.
On the same day the Fed starts its meeting, Germany’s high court is expected to rule on whether the country can participate in a European bailout fund. The court rejected a last-minute appeal to delay the decision on Tuesday.
“It’s going to get interesting this week,” said Randy Frederick, managing director of active trading and derivatives at the brokerage Charles Schwab.
Frederick expects the Fed will make some sort of move, especially after the government reported last Friday that employers added fewer than 100,000 jobs in August.
“Prior to the employment report people weren’t as sure,” Frederick said. “I am definitely on the majority side here. There’s some sort of easing coming.”
In other trading, the Standard & Poor’s 500 index rose 4.48 points to 1,433.56. The Nasdaq composite increased 0.51 of a point to 3,104.53.
Ron Florance, managing director of investment strategy at Wells Fargo Private Bank in Scottsdale, Ariz., said he’s always wary when stocks rise on nothing more than expectations.
“These are the things that make you nervous, when markets are going strong in anticipation of news,” Florance said.
On Tuesday, the Commerce Department reported that exports to Europe dropped 11.7 percent in July, stoking concerns that Europe’s troubles could smother the U.S. recovery. Overall U.S. exports fell 1 percent to $183.3 billion, lowered by weaker sales of autos, telecom equipment and heavy machinery.
Morgan Stanley and Citigroup rose after the two banks settled a dispute over how much to value their jointly owned brokerage firm, Morgan Stanley Smith Barney. The deal cleared the way for Morgan Stanley to buy Citigroup’s stake. Citi gained 83 cents to $32.66. Morgan Stanley rose 64 cents to $17.25.
A profit warning from luxury clothing chain Burberry helped tug down other high-end retailers in early trading. Burberry said slowing sales to China will likely weaken earnings. Ralph Lauren lost $4.09 to $156.22. Tiffany & Co. sank 78 cents to $62.26.
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