NEW YORK (TheStreet) -- The Dow Jones Industrial Average and S&P 500 closed at record highs Tuesday on expectations the Federal Reserve won't pullback on its stimulus measures at the conclusion of its two-day policy meeting tomorrow given that the U.S. economic recovery continues to struggle.
The S&P 500 gained 0.6% to close at 1,771.95 while the Dow Jones Industrial Average jumped 0.7% to 15,680.35 and the Nasdaq added 0.3% to 3,952.34.
The Fed's policy-making statement Wednesday is unlikely to announce a so-called tapering to its monthly asset purchases, Eric Stein, portfolio manager with Eaton Vance's Global Income Group, said Tuesday at a luncheon in New York. Stein added that the Fed could approach a policy in which it sometimes tightens and sometimes loosens asset purchases at later policy meetings, dependent upon the economic data coming out then.
A spate of economic data released earlier today was mostly positive but not strong enough to allow investors to expect that the Fed would view the reports as signs that it could begin to cutback on the roughly $385 million bond-buying program that is credited with stabilizing the economy following the 2009 recession.
U.S. retail sales excluding auto dealers rose 0.4% in September, showing ongoing growth in confidence before the partial government shutdown. Figures from the Commerce Department met consensus expectations.
"Housing data yesterday was positive along with the Case-Shiller index today, while earnings are mixed but generally supportive of the market," Schaeffer's Investment Research director of research Todd Salamone said in a phone interview. "The Fed is not causing anyone to buy or sell with expectations for tapering moving back to January or March."