Stocks Higher As Fed Kicks Off 2-Day Meeting - KSWO 7News | Breaking News, Weather and Sports

Stocks Higher As Fed Kicks Off 2-Day Meeting

By JOSHUA FREED
AP Business Writer

Stocks rose on Tuesday as investors shrugged off worries about what the Federal Reserve is up to.

Many expect the Fed to reduce its $85 billion monthly bond-buying program after a two-day meeting that began on Tuesday. Wall Street is hoping for a small reduction, because the bond-buying has had the effect of keeping interest rates ultra-low and making it cheaper to borrow money.

Shortly after noon Eastern, the Dow Jones industrial average was up 38 points, or 0.3 percent, at 15,533.

The Standard & Poor's 500 index rose six points, or 0.4 percent, at 1,704. The S&P 500 was five points below its record high reached on Aug. 2.

The Nasdaq composite was up 22 points, or 0.6 percent, at 3,740.

By some measures, stock market values are as high compared to the size of the nation's economy as they were at the end of the Internet bubble in 2000, said Martin Leclerc , Principal, Chief Investment Officer and Portfolio Manager of Barrack Yard Advisors in Bryn Mawr, Pa.

Then, there was at least the justification of new technology.

"Now, the only justification we have is cheap money," Leclerc said.

Nonetheless, Leclerc said, with a bull market underway stocks could keep climbing regardless of valuations. "This thing is a powerful beast," he said.

Eight out of 10 industry groups in the S&P 500 rose, led by technology. Materials and health care stocks were the only two sectors that fell.

A few companies benefited from large investments.

Safeway, a major grocery store chain, jumped $2.46, or 9 percent, to $30.50 after saying an unnamed investor had bought a significant amount of its stock. Safeway said it adopted a "poison-pill" defense measure to thwart any hostile takeover attempt.

Aeropostale jumped $1.49, or 17 percent, to $10.10 after Sycamore Partners disclosed an 8 percent stake in the teen retailer. And Huntsman, a chemical maker, rose 50 cents, or 3 percent, to $19.67 after saying it will pay $1.1 billion for two businesses from Rockwood Holdings, which rose 48 cents, or 0.7 percent, to $67.09.

Other companies making big moves included:

- Abercrombie & Fitch rode Aeropostale's coattails, moving up $1.01, or 2.7 percent, to $38.35.

- Microsoft rose after announcing a 22 percent dividend increase and a $40 billion stock buyback program. Microsoft gained 30 cents, or 1 percent, to $33.10.

- Outerwall, which owns the Redbox DVD kiosks, plunged $6.98, or 8 percent, to $48.99 after slashing its outlook because of weaker-than-expected demand for discs.

Overseas markets moved lower. The FTSE-100 in Britain fell 0.8 percent, the DAX in Germany and the CAC-40 in France both fell slightly. Japan's Nikkei fell 0.6 percent.

Also Tuesday, the Labor Department reported that U.S consumer prices barely rose last month, the latest sign that slow economic growth is keeping inflation tame.

The price of crude oil fell $1.35, or 1.4 percent, to $105.25 a barrel in New York. The yield on the benchmark 10-year Treasury note edged down to 2.85 percent from 2.86 percent late Monday.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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