This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Stocks Advance Despite Speculation Fed to Taper

NEW YORK (TheStreet) -- U.S. stocks rose for a third time Tuesday as investors await guidance from the Federal Reserve about the future of its sweeping economic stimulus program.

The S&P 500 rose 0.42% to close at 1,704.76 while the Dow Jones Industrial Average added 0.29% to finish at 15,539.63. The Nasdaq gained 0.75% to 3,745.70.

The S&P has gained 4.4% in September, but is sideways since the end of July as investors voiced concern about the strength of the U.S. economic recovery and the possibility that the Fed would begin to curb the stimulus measures that helped fuel the S&P 500's 18% gain during the first seven months of 2013. The S&P 500 has advanced 1.1% since July 31.

"Everybody thought that tapering was going to take the market down, but so far it hasn't," said Dan Veru, chief investment officer at Palisade Capital Management. "So far, the big scary September-October period hasn't been so scary."

Microsoft  (MSFT) added 0.39% to $32.93 after the software maker announced a 22% increase to its dividend and a replacement to its $40 billion buyback program.

Safeway (SWY) was the biggest gainer on the S&P, surging 10.5% to $30.99 as the food and drug retailer said it's implementing a one-year stockholder rights plan that includes the activation of a poison pill if a person or group acquires 10% or more of the company's outstanding common stock or 15% or more in the case of a passive institutional investor. Safeway made the announcement after it "became aware of an accumulation of a significant amount of the common stock of the company."

"Everyone can exhale until we have to start worrying about what the Fed will do next, and how the latest fiscal battle in Washington will play out," Ed Yardeni, the New York-based president and chief investment strategist at Yardeni Research said in a client note. "When these issues are resolved, there will be another relief rally."

The Goldman Sachs financial conditions index shows that the economy has worsened slightly since the committee's July meeting owing largely to higher interest rates. Goldman Sachs anticipates the Fed will announce the beginnings of a "soft taper" at this week's meeting, featuring a widely expected $10 billion cut to the monthly rate of asset purchases, as the Fed appears to remain particularly concerned about the continued rise in mortgage rates while weighing the potential cost of the ongoing purchases.

The Consumer Price Index increased by a less-than-expected 0.1% in August after gaining 0.2% in July, the Bureau of Labor Statistics said Tuesday. Economists were expecting an increase of 0.2%, according to a Thomson Reuters survey of economists.

The National Association of Home Builders' housing market index meanwhile remained at 58 for September after August's number was downwardly revised from 59. The index continues to sit at an eight-year high, though the NAHB commented there has been a pause in momentum as consumers wait to see where interest rates settle.

The benchmark 10-year Treasury was increasing 3/32, raising the yield to 2.855%.

U.S. stocks gained Monday with the S&P 500 advancing to a six-week high as investors bet on an extension of the Federal Reserve's stimulus program and a smooth leadership transition at the central bank as former U.S. Treasury Secretary Larry Summers withdrew his name from consideration as the next Fed chairman.

-- Written by Andrea Tse and Joe Deaux in New York

>To contact the writer of this article, click here: Andrea Tse.>

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,039.49 +60.36 0.36%
S&P 500 1,992.37 +5.86 0.30%
NASDAQ 4,532.1040 +5.6220 0.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs