--Stocks gain as technology strength helps support sentiment ahead of Fed policy statement
--S&P 500 sitting 0.3% away from its Aug. 2 record high close
--Crude oil extends decline; Treasury yields slip
--CPI rose 0.1% in August, matching expectations; NAHB housing market index unchanged, as expected
By Tomi Kilgore
NEW YORK--U.S. stocks rose, with the S&P 500 approaching a record high, as strength in technology shares lent support
ahead the much-anticipated Federal Reserve policy statement on Wednesday.
The Dow Jones Industrial Average advanced 37 points, or 0.2%, to 15532 in midday trade.
Within the Dow, Microsoft rose 0.7% after the software giant announced a $40 billion share repurchase plan and raised
its dividend by 22% to 28 cents a share. Fellow technology component Intel rallied 1.8%.
The S&P 500 index gained seven points, or 0.4%, to 1704, and the technology-friendly Nasdaq Composite Index climbed 24
points, or 0.7%, to 3742.
The S&P 500, which has gained 20% so far this year, was 0.3% shy of the Aug. 2 all-time closing high of 1709.67.
Technology and utilities were the leading sector gainers, while the materials sector paced the decliners.
Paul Nolte, managing director at Chicago-based investment advisor Dearborn Partners, which manages about $4 billion,
said investors don't seem too worried about what the Fed might announce Wednesday, as they are becoming more comfortable
with the idea that the economy is growing.
"There is a fairly large range of outcomes that the market has grown comfortable with," Mr. Nolte said. "The market is
taking it all in stride. There is an underlying strength."
Meanwhile, Mark Newton, partner and chief technical analyst at Greywolf Execution Partners, said he is worried about
the "nonchalance and complacency" investors are showing ahead of the Fed meeting. "A lot of my indicators are suggesting
the market is due for a pause or a reversal," he said.
The consumer-price index for August rose 0.1% on the month, and also rose by 0.1% when excluding food and energy,
matching expectations. The National Association of Home Builders' housing market index for September was 58, in line
The two-day meeting of the Federal Open Market Committee begins Tuesday and will culminate with a statement at 2 p.m.
EDT Wednesday, followed by a news conference by Fed Chairman Ben Bernanke. Most investors expect the central bank to
announce a reduction to its $85-billion-a-month bond-buying programs.
The yield on the 10-year Treasury inched lower, to 2.842% from 2.875% late Monday.
"The anticipation is that the Fed will start reducing stimulus slowly, or may even wait till later meetings," said
John Stoltzfus, chief market strategist at Oppenheimer Asset Management. "Any move after the Fed statement will be
modest," Mr. Stoltzfus said, as the markets have already priced in Fed tapering, or the paring back on bond purchases.
He believes there is still a chance the Fed does nothing, which would invoke a positive reaction from stocks.
Crude-oil futures extended the recent weakness, on the back of reduced tensions in Syria and after Libya said it
resumed production at previously closed fields. The October contract fell 1.3% to $105.18 a barrel. October gold futures
declined 0.7% to $1,309.10 an ounce. The dollar lost ground against the euro but edged higher against the yen.
European markets declined. The Stoxx Europe 600 fell 0.5%, pulling back from Monday's five-year closing high.
Meanwhile, the ZEW economic expectations indicator for Germany rose in September to the highest level since April 2010.
Germany's DAX 30 index slipped 0.2%.
Asian markets were mostly lower, highlighted by a sharp selloff in Chinese stocks. China's Shanghai Composite slumped
2.1%, weighed down by weakness in banking stocks ahead of the Mid-Autumn Festival four-day holiday weekend. Japan's
Nikkei Stock Average lost 0.7%, following a holiday on Monday.
In corporate news, Aeropostale rallied 18% after Hummingbird, which is indirectly owned by private-equity firm
Sycamore Partners, said in a filing that it has taken a nearly 8% stake in the apparel retailer.
General Motors rose 1.6% after the largest U.S. auto maker said it was developing an electric car priced at around $
30,000 that can go 200 miles on a charge.
Safeway climbed 8.7% after the supermarket operator said it has become aware of a significant accumulation of its
shares by an unnamed investor. The company said it has adopted a shareholder rights plan with a 10% trigger. A
shareholder rights plan, known as a "poison pill," dilutes the value of a stock through the issuance of additional
shares, making it expensive for an investor to acquire a controlling stake.
Write to Tomi Kilgore at firstname.lastname@example.org
(END) Dow Jones Newswires
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