U.S. Stocks Bounce Back
WASHINGTON – Stocks gained as foreign markets stabilized and investors awaited word from a two-day Federal Reserve policy meeting that begins Tuesday.
The Dow Jones Industrial Average gained 72 points, or 0.5%, to 15910 in midmorning trade. On Monday, the Dow ended a choppy session down 41 points, or 0.3%, its fifth-straight loss.
The S&P 500 index added nine points, or 0.5%, to 1791, with health-care and financial shares leading eight of 10 sector groups higher. The technology-heavy Nasdaq Composite Index climbed 11 points, or 0.3%, to 4095, as Apple weighed after reporting results late Monday.Calm trading sessions in emerging markets after recent heavy selloffs lent a tone of relief to U.S. markets. The stabilization came amid efforts by emerging-market central banks, such as Turkey’s, to curb the recent selloffs in their currencies.
U.S. stocks extended gains Tuesday after data showed consumer confidence continues to improve. The confidence index rose to 80.7 in January from 77.5 in December, the Conference Board said Tuesday, topping expectations for a slight rise to 77.6.
“U.S. stocks have been under pressure because of a selloff emanating from emerging markets and fears there, but the bottom line is news on the U.S. economic front isn’t bad,” said Nick Sargen, chief investment officer at Fort Washington Investment Advisors, which has about $45 billion in assets under management.
Investors are waiting to see what the U.S. central bank does at its two-day meeting that concludes on Wednesday. The Fed will consider whether to carry on with tapering its bond-purchase program or to put the brakes on further cuts to its bond buys after recent market routs. This will be the last meeting for Chairman Ben Bernanke. Mr. Sargen sees the Fed proceeding with expected plans to cut its bond program by an additional $10 billion. “The Fed has been more confident that the U.S. economy has improved,” he said. “They won’t take pleas from emerging markets into account if it means not doing what they see as right for the U.S. economy,” Mr. Sargen said.
Turkey’s central bank governor, Erdem Basci, said he won’t “refrain from permanent policy tightening,” affirming expectations for a key rate increase to support the lira at a forthcoming rate announcement. Also, a 0.25-percentage-point rate increase by India’s central bank lent support to India’s rupee and other recently battered emerging-market currencies.
“The central bank actions have stabilized things for now, but we don’t know if that will be temporary or enduring,” said Patrick Chovanec, chief strategist at Silvercrest Asset Management, which oversees about $14.1 billion. “People are still in the process of digesting and dissecting the risks.” “We’re sort of stuck, between looking backward at the emerging-market meltdown and looking forward to the Fed,” Mr. Chovanec said.
The yield on the 10-year Treasury note ticked down to 2.762% from 2.766% late Monday. Crude-oil futures advanced 1.8% to $97.43 a barrel, while gold futures shed 1% to $1,251.20 an ounce. The dollar gained some ground against the euro and the yen.
In Europe, the Stoxx Europe 600 rose 0.8%, after sliding 4.2% over the previous three sessions. Germany’s DAX 30 index added 0.7%, and France’s CAC 40 gained 1.2%. The U.K.’s FTSE 100 tacked on 0.5% after data showing fourth-quarter gross domestic product grew as expected.
The iShares MSCI Emerging Markets exchange traded fund climbed after tumbling 5.4% over the past three sessions and 8.9% since the start of the year. Emerging-market stocks and currencies have been hit hard recently by worries over slowing growth in China, concerns over reduced stimulus from the Federal Reserve and geopolitical stresses in Turkey, Argentina, South Africa and Ukraine. Asian markets were mixed. China’s Shanghai Composite edged up 0.3%, while Japan’s Nikkei Stock Average slipped 0.2%.
In corporate news, Apple slumped after reporting better-than-expected fiscal first-quarter earnings and revenue but iPhone sales that were a bit shy of forecasts, and after providing its customary conservative outlook for the current quarter.
Ford Motor rose after the auto maker reported fourth-quarter earnings and revenue that handily beat forecasts and affirmed its 2014 outlook.
Within the Dow, Pfizer advanced after reporting better-than-expected fourth-quarter earnings.
DuPont fell, reversing earlier gains, even after reporting better-than-expected results. The company also said it would start a $5 billion share-repurchase program.
– WALLSTREET JOURNAL