Stocks Climb as Investors Await the Fed

Markets Dow Jones Newswires

U.S. stocks rose as expectations mounted that the Federal Reserve will continue to strike an accommodative tone in a key statement on interest-rate policy Wednesday.

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The Dow Jones Industrial Average jumped 110 points, or 0.7%, to 17142 in early-afternoon trading.

The S&P 500 rose 15 points, or 0.8%, to 1999. The Nasdaq Composite Index climbed 22 points, or 0.5%, to 4541.

Money managers are awaiting a statement from the Fed and remarks from Fed Chairwoman Janet Yellen scheduled for Wednesday afternoon.

The central bank's efforts to keep down interest rates, which dampened the appeal of competing assets such as bonds, have helped fuel a 7.4% rally in the S&P 500 this year. But with the economy recovering and inflation in check, investors are increasingly attuned to when the Fed will raise rates.

But traders said remarks by Wall Street Journal correspondent Jon Hilsenrath Tuesday afternoon fueled bets the Fed will maintain its accommodative stance, giving stocks a lift. The Federal Reserve may keep the words "considerable time" in its policy statement, but qualify them, said Mr. Hilsenrath, the Journal's chief economics correspondent, on Tuesday in a webcast previewing the central bank's two-day policy meeting.

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"The anticipation was that tomorrow was going to be a bit of a shift," said Brett Mock, managing director at brokerage JonesTrading Institutional Services LLC. "With Hilsenrath saying the language is going to stay the same, people are thinking it'll be less of an event."

Buying in bonds on Tuesday pushed the yield on the 10-year U.S. Treasury note down to 2.564%. Yields fall as prices rise.

Income-producing stocks such as utilities and real-estate investment trusts, which some investors see as similar to bonds, outperformed. Utilities in the S&P 500 advanced 1.3%. The MSCI U.S. REIT index added 0.9%.

Energy stocks also gained ground as crude-oil futures added 2% to $98.11 a barrel.

On the economic front, producer prices were unchanged in August from July, the Labor Department reported, matching the median estimate of economists in a Wall Street Journal poll. The reading suggests economic improvement in the U.S. isn't stoking inflation.

European markets fell Tuesday as investors considered the implications of Scotland's upcoming referendum on independence, which remains too close to call. The British pound fell 0.2% to $1.6189, and London's FTSE declined 0.4%.

The outlook for the German economy weakened in September as concerns about the eurozone economy and Russian sanctions weighed on sentiment. The Stoxx Europe 600 Index fell 0.3%.

In corporate news, Humana added 2.8% after the insurer announced a $2 billion stock buyback program.