Tuesday, September 17 16:27:01
U.S. stocks rose slightly today on expectations the Federal Reserve will make a modest cut in its stimulative bond buying and keep interest rates extraordinarily low, the latter a boon to stocks.
The policy-making Federal Open Market Committee begins its two-day meeting on Tuesday to discuss whether to scale back its monthly $85 billion in bond purchases, or quantitative easing, to aid the economy. Many investors expect the Fed and its chairman, Ben Bernanke, will scale back purchases by $10 billion a month while keeping rates close to zero for some time.
"It seems like now the market is believing that tapering will be very well managed by Bernanke, that he knows exactly what the market is expecting and that he's not going to disappoint," said Jack De Gan, principal and senior advisor at Harbor Advisory in Portsmouth, New Hampshire.
"We know that the tapering will be subjective based on the economic information that is coming in, and that the interest rate policy will remains as it is for a very long time."
A statement of the FOMC's decision will be released on Wednesday afternoon followed by a news conference by Bernanke.
Data on Tuesday showed U.S. consumer prices barely rose in August compared with July as the cost of energy fell, but an increase in rents and medical care costs pointed to a stabilization in underlying inflation that could make it easier for the Fed Reserve to start trimming its bond purchases.
The Dow Jones industrial average was up 52.92 points, or 0.34 percent, at 15,547.70. The Standard and Poor's 500 Index was up 5.75 points, or 0.34 percent, at 1,703.35. The Nasdaq Composite Index was up 14.68 points, or 0.39 percent, at 3,732.53.