Stocks rise; Fed sees gradual expansion
NEW YORK (MarketWatch) -- U.S. stocks on Wednesday ended with mild gains that started just before the release of the Federal Reserve's Beige Book, which found gradual economic expansion across the Fed's 12 districts.
"The Beige Book indicated the economy is okay, at best, but it's not rebounding so quickly that you have to discount chances of some type of move from quantitative easing, which is a near-term positive for the market," said Robert Pavlik, chief market strategist at Banyan Partners. Read more on Beige Book.
But it's too soon to tell if another monetary easing move by the central bank is completely priced in, Pavlik said.
"It's going to depend on how they do it, and the size of the program they decide on," said Pavlik, who believes any such move would come at the Federal Open Market Committee gathering in September.
After falling 22 points and rising 42, the Dow Jones Industrial Average (DJIA) ended 4.49 points higher, or less than 0.1%, at 13,107.48. That was the blue-chip index's first gain in three days.
In position for a third monthly gain, the S&P 500 Index (SPX) rose 1.19 point, or 0.1%, to 1,410.49, with telecommunications the best performing and energy the greatest laggard of its 10 sectors. It was also the first gain in three days for the S&P 500.
Among the biggest S&P 500 gainers,
The Nasdaq Composite (COMP) advanced 4.05 points, or 0.1%, to 3,081.19. The index was up for four consecutive days, its longest winning streak since early July.
Volume was very low, in keeping with past sessions. There were nearly 510 million shares traded on the New York Stock Exchange. For every three stocks that advanced, two declined. Composite volume for NYSE-listed shares was just above 2.5 billion, the 11th session of volume under 3 billion this month. August is on track for its lowest monthly average since May 2007.
Wednesday's release of the central bank's collection of anecdotes comes two days before Fed Chairman Ben Bernanke's speech at an annual symposium in Jackson Hole, Wyo.
Economic reports this week have failed to garner much of a reaction from investors at what's typically a low-volume, lackluster time of the year for Wall Street, with many on vacation ahead of the Labor Day holiday.
And, what little focus investors seemed to have was almost exclusively drawn to Bernanke's coming words.
"Everybody at this point is much more fixated at what Chairman Bernanke says on Friday in terms of setting monetary policy," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.
"What we're looking for is the Fed giving us some short of que in terms of their next step," Baird said.
Oil prices fell as Hurricane Isaac did not do any significant damage to production in the Gulf Coast and data showed that inventories unexpectedly climbed last week. Crude futures for October delivery (CLV2) fell 84 cents, or 0.9%, to $95.49 a barrel on the New York Mercantile Exchange. Read more on oil futures.
The Commerce Department said gross domestic product rose at a 1.7% annual rate from April through June, up from its prior estimate of 1.5%. Read more on GDP.
"It is like a car traveling at 17 miles per hour in a 55 mile-per-hour speed zone," Fred Dickson, chief investment strategist at Davidson Cos., wrote of the economy's performance.
"The next potential market-moving event occurs Friday," Dickson said of Bernanke's coming talk at an annual symposium in Jackson Hole, Wyo.
Wall Street offered muted reaction to another indication of strengthening in the housing sector, with the National Association of Realtors reporting its index of pending-home sales rose 2.4% in July.
"This is just the latest in an ongoing story showing sustained gains in the housing market," said Dan Greenhaus, chief global strategist at BTIG LLC, in emailed research.