Closing Bell: Investors, Unworried by Fed's Plans, Lift S&P 500 Near Record
Stock markets rose Tuesday as investors shrugged off worries about what the Federal Open Market Committee will decide to do about economic stimulus at its meeting this week. Many expect the Fed to reduce its $85 billion monthly bond-buying program. Wall Street is hoping for a small reduction, because the bond-buying has kept interest rates ultra-low and made it cheaper to borrow money.
The Dow Jones industrial average closed up 35 points, or 0.2 percent, at 15,529. The Standard & Poor's 500 index rose 7 points, or 0.4 percent, to 1,704 -- just 5 points shy of its record high reached on Aug. 2. The Nasdaq composite was up 27 points, or 0.4 percent, to 3,745. Benchmark U.S. crude oil fell $1.17, or 1.1 percent, to close at $105.42 a barrel on the NYMEX, after dipping $1.62 on Monday.
The Labor Department reported on Tuesday that U.S consumer prices barely rose in August -- another sign that slow economic growth is keeping inflation low.
Rising tech stocks included the video game company Electronic Arts (EA), which is getting a solid start with this year's version of its Madden football franchise. Electronic Arts rose 64 cents, or 2.4 percent, to $27.60.
Internet radio giant Pandora Media (P) saw its stock rebound by 5 percent to $25.19, a day after it announced a plan to sell a large amount of new shares.
Computer memory maker Micron Technology (MU) rose 40 cents, or 2.4 percent, to $16.84 as investors bet that memory prices will rise after a fire shut down a competitor's factory in China.
A few companies benefited from large investments.
Safeway's (SWY) board enacted a "poison pill" plan to stave off a hostile takeover after learning that an unknown investor had accumulated a significant fraction of its stock. The announcement sent shares of the grocer spiking to a five-year high Tuesday. They closed at $30.99, up $2.95, more than 10 percent.
Aeropostale (ARO) jumped $1.55, or 18 percent, to $10.16 after Sycamore Partners disclosed an 8 percent stake in the teen retailer. And Huntsman (HUN), a chemical maker, rose 36 cents, or 2 percent, to $19.50 after saying it will pay $1.1 billion for two businesses from Rockwood Holdings (ROC), which rose 61 cents, or 0.9 percent, to $67.22.
Other companies making big moves included:
Abercrombie & Fitch (ANF) rode Aeropostale's coattails, moving up $1.10, or 3 percent, to $38.44.
Microsoft (MSFT) said Tuesday that it would boost its quarterly dividend by 5 cents a share to 28 cents, and launch a new $40 billion stock buyback program. Microsoft shares rose 11 cents to $39.92.
Boeing (BA) rose $1.45, or 1.3 percent, to $117.12 as a stretched version of its new 787 flew for the first time. Boeing's gain was responsible for one-third of the Dow's rise.
Outerwall (OUTR), which owns the Redbox DVD kiosks, plunged $6.48, or 11.6 percent, to $49.49 after slashing its outlook because of weaker-than-expected demand for discs.
Major business and economic events scheduled for Wednesday:
The Commerce Department will release housing starts for August at 8:30 a.m.
The Federal Open Market Committee meets to set interest rates.
The European Commission will present draft legislation designed to prevent further manipulation of LIBOR and other financial benchmarks.
FedEx (FDX) reports quarterly earnings before the market opens.
Oracle (ORCL) reports quarterly earnings after the market closes.
-Compiled from staff and wire reports.