NEW YORK – Wall Street was set for a sixth day of gains on Wednesday as investors anticipated the U.S. Federal Reserve will announce a fresh stimulus plan to support the economy at the end of a two-day monetary policy meeting.
The Fed is expected to unveil a new round of bond buying later on Wednesday to boost a fragile economic recovery threatened by political wrangling over the government's budget. The monetary policy committee's decision is expected around 12:30 p.m. ET.
"I think the market has already discounted that the Fed is going to announce more stimulus, so what's more important is what Chairman Bernanke says, which may give us clues on economic activity going forward," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"We might see a bit of selloff after Bernanke's comments, but we've been up for five straight days, so that shouldn't be surprising."
Negotiations intensified to avert the "fiscal cliff" - tax hikes and spending cuts that kick in early in 2013 - ahead of a year-end deadline as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals.
BlackRock, one of the world's biggest asset managers, expects the S&P 500, the broad measure of U.S. stocks, to scale new heights in 2013 and reach 1,600 by the end of the year. That's a gain of more than 12 percent from current levels and would surpass the index's previous peak of 1,576.09 set in 2007.
On Tuesday, the S&P 500 closed at its highest level since November 6, led by technology companies. With just two weeks of trading left this year, the S&P 500 is up about 13.5 percent so far; it ended the year flat in 2011.
S&P 500 futures rose 2.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 16 points, and Nasdaq 100 futures added 7.5 points.
Data on Wednesday showed U.S. import prices fell the most in five months in November as food and fuel costs tumbled, keeping inflation pressures subdued against a backdrop of weak economic activity. The equity markets' reaction to the report was muted.
India's government announced an inquiry into lobbying practices by Wal-Mart Stores Inc. on Wednesday after a report that the giant retailer had pressed U.S. lawmakers to help gain access to foreign markets.
Costco Wholesale Corp posted a 30 percent rise in quarterly profit, beating expectations, as the largest U.S. warehouse club chain saw sales rise and got a lift from higher membership fees.
Sprint Nextel Corp is in talks with Intel Corp and Comcast Corp to buy out their stakes in the U.S. wireless provider Clearwire Corp , two people familiar with the matter said on Tuesday.
(Editing by Bernadette Baum)