Market Snapshot
U.S. stocks end higher; Dow at highest since 2007
NEW YORK (MarketWatch) -- U.S. stocks climbed Tuesday, as optimism among investors ahead of decisions by a German court and the Federal Reserve fueled a rise in the Dow industrials to their highest finish in nearly five years.
"There's a bit more sense of hope right now, but it's cautious optimism," said Robert Pavlik, chief market strategist at Banyan Partners, citing potential central-bank moves for bolstering the global economy.
Up for a fourth session out of the past five, the Dow industrials
(DJIA)
climbed 69.07 points, or 0.5%, to close at 13,323.36, with
The S&P 500 Index (SPX) rose 4.48 points, or 0.3%, to 1,433.56, with energy and financials pacing the gains and utilities and consumer staples the worst performers of its 10 industry groups.
"The consistent market strength since this rally launched in June continues to convert sideline sitters to bulls and the pre-existing bulls are raising their targets," Elliot Spar, market strategist at Stifel Nicolaus, wrote in an afternoon note. He's advising patience and putting money to work on any S&P 500 pullbacks in the 1,400 to 1,397 range.
The Nasdaq Composite Index
(COMP)
closed at 3,104.53, up 0.51 point, or 0.02%, well off the session's high as shares of
For every stock on the decline, more than two rose on the New York Stock Exchange, where nearly 667 million shares traded. Composite volume neared 3.5 billion.
Red flag
In a statement Tuesday, Moody's Investors Service said the United States stands to lose its top credit rating unless lawmakers reach an agreement to cut the amount of debt relative to gross domestic product in budget talks next year.
The ratings company is putting Congress on notice that it has to "at least put the car in a gear and start moving toward some type of negotiation to reach some sort of compromise. You have to react, you can't just allow this to play out," commented Pavlik. See Moody's and S&P fighting last, wrong war.
The dollar (DXY) fell against other currencies, including the euro (EURUSD) , which hit a four-month high after the Moody's warning. Treasury prices fell, with the yield on the 10-year note (10_YEAR) rising to 1.693%. Read more on bonds.
Oil prices rose, with the futures contract for October delivery (CLV2) rising 0.7% at $97.17 a barrel on the New York Mercantile Exchange. Read more on oil.
Gold futures (GCZ2) added $3.10 to finish at $1,734.90 an ounce. Read more on metals.
Germany's highest court said it would rule Wednesday on whether to let the nation ratify the European Stability Mechanism, rejecting a lawmaker's appeal that it postpone the decision after the European Central Bank commits unlimited funds to buy the bonds of troubled euro-area members.
"I suspect it will be ruled as legal," said Pavlik, echoing the consensus view of market participants.
The Federal Open Market Committee on Wednesday begins a two-day session on methods to stimulate the economy, with the Fed at the very least expected to extend the record-low rate for Fed funds and at most to signal a third round of monetary easing.
"If they decide to reference lower rates for an extended period of time, that's factored in," Pavlik pointed out. "If they initiate some type of quantitative easing with Treasurys or mortgage-backed securities, that is not completely priced in."
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