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."
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. Follow @atwtse -- Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.>
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