Stocks Seek Direction; German Ruling, Fed Eyed

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Sentiment on Wall Street got a boost from a German court ruling that paved the way for the ratification of the eurozone's permanent rescue fund, but traders remained cautious ahead of the Fed decision on tap for Thursday.

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Today's Markets

As of 10:40 a.m. ET, the Dow Jones Industrial Average fell 4.3 points, or 0.03%, to 13319, the S&P 500 gained 0.11 point, or 0.01%, to 1434 and the Nasdaq Composite slipped 1.5 points, or 0.05%, to 3103.

The Dow is sitting at its highest level since December 2007. The Nasdaq and S&P 500 are both sitting right beneath multiyear highs as well.

Market participants have been waiting for weeks to hear a ruling from the German Constitutional Court on the ratification of the European Stability Mechanism. The ESM has a capacity of roughly $905 billion that is to be used as part of a broader plan to stem the eurozone's debt crisis that is now in its third year. Germany, seen as Europe's paymaster, was the last of the country in the 17-member bloc to ratify the ESM. After the country's parliament passed the measures, thousands of individuals called on the courts to intervene, on the grounds that it was unconstitutional.

The court, based in Karlsruhe, backed the ESM, but on the condition that any German liability greater than $244 billion would require passage by the country's lower house of parliament, the Bundestag.

"This is a good day for Germany and a good day for Europe," German Chancellor Angela Merkel said in a speech to parliament, according to multiple media reports.

The euro rallied above $1.292, the highest level in four months, on the news. European equities broadly advanced. Still, market participants remained wary about the situation in the eurozone.

"More legislative and political challenges lay ahead," Dan Greenhaus, chief global strategist at BTIG wrote in an email." Today’s ruling simply does nothing to change that larger story."

Elsewhere in Europe, the Netherlands holds parliamentary elections on the day. Analysts at Nomura noted that a win by the anti-European Union party, which is widely unexpected, could "negatively impact sentiment and threaten recovery efforts in the eurozone."

On the U.S. front, the Labor Department said import prices rose 0.7% in August from July, marking the first increase in five months, but coming up short of the 1.4% gain expected. Export prices rose 0.9%, topping estimates of 0.4%. A separate report from the Commerce Department showed inventories at the wholesale level rising 0.7% in the biggest increase since February. Economists expected a gain of 0.2%.

The Federal Reserve's monetary-policy meeting is set to kick off. It concludes with a highly-anticipated decision on Thursday. Market participants broadly expect more easing from the central bank, but the method that might be used is uncertain. Two contenders are another round of quantitative easing and a strengthening of the bank's forward guidance on interest rates.

In commodities, oil prices ticked lower. The benchmark contract traded in New York fell 30 cents, or 0.32%, to $96.86 a barrel. Wholesale New York Harbor gasoline fell 0.4% to $3.032 a gallon.

In metals, gold fell $3.20, or 0.18%, to $1,732 a troy ounce.

Foreign Markets

The Euro Stoxx 50 climbed 0.74% to 2576, the English FTSE 100 rose 0.07% to 5796 and the German DAX jumped 0.77% to 7366.

In Asia, the Japanese Nikkei 225 soared 1.7% to 8960 and the Chinese Hang Seng rallied 1.1% to 20075.