Wall St gains on Fed view

Fed Reserve report on US economic activity boosts outlook modestly.

United States stocks held strong gains Wednesday afternoon after Federal Reserve data showed overall economic activity continues to expand, though at a slow pace.

The Dow Jones Industrial Average was 102 points, or 0.7%, higher at 14,936 points. Intel led gains in 27 of 30 blue-chip stocks after the semiconductor company unveiled new data-center processors.

The S&P 500-stock index added 13 points, or 0.8%, to 1,653 points.

The Nasdaq Composite Index gained 35 points, or 1%, to 3,648 points, with the tech-heavy index helped by strong gains in Apple.

The Federal Reserve's "beige book" survey of regional economic showed the US economy grew at a "modest to moderate" pace in July and August. That language is similar to what the Fed has used for much of the year. The survey also found modest expansion in the manufacturing sector and rising consumer spending in most Fed districts.

The beige book is used to inform members of the Fed's Federal Open Market Committee of changes in the economy since the last meeting. The FOMC will begin a two-day meeting on Sept. 17.

"We're waiting on the Fed," said John Manley, chief equity strategist at Wells Fargo's funds unit. The beige book gives "a little fragment of the picture," that will shape the Fed's decision making, he said.

Many economists expect the Fed to begin to wind down its $85-billion-a-month bond-buying program as early as this month's meeting. That bond-buying program has helped support the economic recovery, but some fear a reduction too soon could throw the country back into recession.

But Mr Manley said statements from Fed officials last month "vaccinated markets against the coming taper," and that "when whatever is coming comes, the market impact will be somewhat dull."

Meanwhile, investors are already looking ahead to the government's jobs report on Friday. The Federal Reserve has said the strength of the labor market is a key driver in its decision on when to start reducing monetary stimulus.

Until the payroll report and the Fed meeting later this month, "investors are waiting to see if September lives up to its reputation as being a bad month for stocks," said Gary Flam, portfolio manager at Bel Air Investment Advisors, which manages about $6.5 billion in assets.

"There are continuous concerns throughout the month, so people are cautiously positioned," he said. Bel Air is most overweight the technology sector, but is not making any changes to its portfolio Wednesday.

Ford Motor Co. rallied after reporting its best retail-sales month in seven years and an increase in its production plans for the fourth quarter.

"It's a great indication that consumers are feeling better about their situation," said Richard Sichel, chief investment officer at Philadelphia Trust, which manages $1.9 billion in assets.

"That's a plus for the economy and the market in general if consumers are willing to spend, and US-based car companies are able to do more than just participate these days," he said.

European markets advanced along with US stocks, after being down ahead of the open of US trade Wednesday. The Stoxx Europe 600 rose 0.2%. Asian markets were mixed, but Japan's Nikkei Stock Average and China's Shanghai Composite extended recent gains with increases of 0.5% and 0.2%, respectively.

October crude-oil futures fell 1.4% to $107.01 a barrel after rising sharply the previous sessions, while September gold futures slipped 1.8% to $1,387.10 an ounce. The dollar lost some ground against the euro, but rose against the yen. The yield on the 10-year Treasury note extended gains to 2.890% as prices fell, nearing the two-year high of 2.936% reached on Aug. 22.

In corporate news, shares of LinkedIn fell after the professional social network announced a plan to sell at least $1 billion worth of common stock to the public.

Apple rose after Cantor Fitzgerald started coverage of the company with a "buy" rating and $777 price target, saying the stock has been "challenged this year" but is now "in the midst of a recovery." Apple recently traded 2.18% higher at $499.16 a share.

Microsoft fell for a third-straight session following its $7 billion deal with Nokia. The company this week announced it would buy Nokia's phone business in an attempt to better compete with Apple and Google in the smartphone market. Nokia was up for a second day.

Micron Technology and SanDisk jumped after a major fire forced rival chip maker SK Hynix to suspend operations at a factory in China.

H&R Block dropped after the tax-services company reported fiscal first-quarter losses that were wider than analyst forecasts, overshadowing revenue that rose more than expected.

Ryanair Holdings' American depositary shares tumbled after the company, Europe's biggest discount airline by passenger numbers, said it may miss its profit forecast for the current fiscal year. The carrier is reducing ticket prices to match a rash of low fares offered by its main competitors since mid-August.

Related Articles