--Stocks erase early losses to trade slightly higher, but investors held back by Fed, budget uncertainties
--Consumer confidence, home-price data in line with expectations; Richmond Fed data disappoint
--Yield on 10-year Treasury note declines; crude-oil prices extend recent weakness
By Tomi Kilgore
NEW YORK--Stocks erased early losses to trade slightly higher, putting blue chips on an early track for the first gain
in four sessions, but lingering uncertainties surrounding Federal Reserve policy and budget discussions kept investors
The Dow Jones Industrial Average added 27 points, or 0.2%, to 15428 in Tuesday afternoon trade. The Dow was down as
much as 61 points earlier in the session following weak regional manufacturing data before turning higher.
Over the past three sessions, the Dow fell 276 points, or 1.8% to suffer its first three-session losing streak in more
than a month.
The S&P 500 index rose five points, or 0.3%, to 1707, and the Nasdaq Composite Index gained 22 points, or 0.6%, to
Industrials and energy were among the strongest sectors, while technology and utilities declined.
Sal Arnuk, co-head of equity trading at Themis Trading, said investors were slowly coming to grips with the
uncertainties surrounding Fed policy and the budget debate.
"The market has come a long way in the last few months, so we're not surprised to see it consolidate," Mr. Arnuk said.
"But little by little, we're seeing risk factors [fade]."
The S&P 500 lost 1.4% in the past three sessions, after closing at a record high of 1725.52 on Sept. 18 following the
Fed's surprise decision to keep its $85-billion-a-day bond purchasing program intact. But the index is up 6.3% since the
end of June, and is up 20% so far this year.
Adam Sarhan, chief executive of New York-based investment firm Sarhan Capital, said the bounce off the lows was a "
classic example of weakness being bought," as has been the case this year.
"The underlying driver of the market's rally this year has been easy money from global central banks," Mr. Sarhan
said. "We found out last week, that story is alive and well."
The Conference Board's consumer-confidence index for September declined to 79.7 from a revised reading of 81.8 in
August, versus expectations of 79.8. Meanwhile, the Federal Reserve Bank of Richmond's manufacturing index for September
was zero, down August's 14.
Clark Yingst, chief market analyst at brokerage firm Joseph Gunnar & Co., said the Richmond Fed data were a "
disappointment," especially following other strong regional manufacturing data recently.
The S&P 500 was down as much as 0.4% soon after the release of the Richmond Fed data before turning higher.
Mr. Yingst expects the market to remain volatile following economic-data releases, since the Fed said policy will
remain dependent on coming data. "With the Fed staying data-dependent, the market will see increased volatility around
economic data," he said.
Earlier, the S&P/Case-Shiller 20-city home-price index for July rose 12.4% from year-earlier levels, in line with
expectations for a 12.5% increase.
The yield on the 10-year Treasury note fell to 2.648% from 2.714% late Monday.
November crude-oil futures lost 0.9% to $102.66 a barrel, on track for the lowest settlement in nearly seven weeks.
September gold futures fell 0.9% to $1,314.80 an ounce. The dollar inched up against the euro and yen.
European markets gained, with the Stoxx Europe 600 closing up 0.2%, following data showing a pickup in German business
confidence. The Ifo Institute's business sentiment index for September rose to 107.7 from August's 107.5, just shy of
expectations of 108. Meanwhile, the business expectations index increased to 104.2 from 103.3, topping forecasts of 104.
Germany's DAX 30 index tacked on 0.3%.
Asian markets were mostly lower. China's Shanghai Composite lost 0.6%, pulling back after rallying 1.3% in the
previous session. Japanese markets reopened after a long holiday weekend, with the Nikkei Stock Average slipping 0.1%.
In corporate news, Applied Materials rose 8.1% after the semiconductor-equipment maker agreed to merge with Japan's
Tokyo Electron (8035.TO, +0.41%) creating a company with a market capitalization of $29 billion.
Facebook rallied 3.6% and reached an all-time intraday high. A report in the South China Morning Post said the Chinese
government plans to lift an Internet-access ban within the Shanghai free-trade zone, which could clear citizens to visit
social media sites like Facebook. Also, Citigroup upgraded Facebook to "buy" from "neutral," saying factors that drove
sharper growth in the second quarter appeared sustainable.
Red Hat slumped 11% after the software company reported late Monday disappointing fiscal second-quarter billings data,
offsetting earnings and revenue that were slightly above analyst estimates. Through Monday's close, the stock had gained
15% since first-quarter results were reported.
Write to Tomi Kilgore at firstname.lastname@example.org
(END) Dow Jones Newswires
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