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US stocks higher on Fed stimulus hopes

Sep 12 2012 07:44
AFP

New York - US stocks mostly rose on Tuesday, lifted by upbeat economic data and hopes that a Federal Reserve meeting will deliver economic stimulus and a key German court decision will ease eurozone turmoil.

The Dow Jones Industrial Average finished at 13,323.36, up 69.07 points.

The S&P 500-stock index rose 4.48 to 1,433.56, while the tech-rich Nasdaq lagged the broader market, adding a scant 0.51 point at 3,104.53.

"Traders got some good news from the domestic economic front, as the trade deficit came in smaller than expected, while small business optimism improved in August," Charles Schwab & Co. analysts said.

"However, sentiment was held in check by the anticipation of tomorrow's key German ruling on the eurozone permanent bailout fund and Thursday's monetary policy decision."

The Fed's Federal Open Market Committee opens a two-day policy meeting on Wednesday amid expectations it will take some fresh action to help the economy.

Citigroup and Morgan Stanley unveiled an agreement for Morgan Stanley to buy Citi's 14% stake in their brokerage joint venture, Morgan Stanley Smith Barney Holdings, which was valued at $13.5bn.

Citigroup said in a regulatory filing it would take a third-quarter after-tax charge of $2.9bn on the deal; Citi shares jumped 2.6%. Morgan Stanley added 3.9%.

On the 30-stock Dow, Bank of America led the gainers, up a hefty 5.2%. Insurance giant Travelers Companies surged 2.5%.

Kraft Foods was the biggest blue-chip decliner, down 1.1%.

Apple, whose 2.6% tumble weighed heavily on the markets Monday, slipped 0.3% ahead of its expected announcement Wednesday of the next generation of its popular iPhone.

McDonald's shed 0.1%, reversing earlier gains, after reporting a 3.7% rise in global August same-store sales.

Bond prices were slightly lower. The yield on the 10-year Treasury climbed to 1.70% from 1.68% Monday, while the 30-year yield rose to 2.85% from 2.84%. Bond yields move inversely to prices.


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