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Stocks turn higher after release of Fed minutes
NEW YORK -- Traders pushed shares higher Tuesday after minutes from the latest Federal Reserve meeting kept hope alive that the central bank would take more action to stimulate the economy.
The Fed had said after its Sept. 21 meeting that it was concerned that inflation was too low, and suggested it could step up its purchases of government bonds and take other action to encourage lending.
Minutes from the September meeting, released Tuesday afternoon, indicated Fed chairman Ben Bernanke and his colleagues were nearing a consensus on what steps to take. Traders are hoping for more concrete news from the Fed following its next meeting in early November.
The dollar fell against other currencies after the Fed minutes came out as traders anticipated another reduction in U.S. interest rates.
Stocks turned sharply higher in the afternoon, led by financial stocks. Technology stocks edged slightly higher, led by Citrix Systems Inc. and Apple Inc. The tech-heavy Nasdaq composite index rose half a percent, while the Dow Jones industrial average rose about 35 points in late afternoon trading.
Google shares briefly rose by $2.42 after the company said it would invest in wind farms off the East coast but had given most of their gains by the late afternoon. Apple hit a record, approaching $300 for the first time, after Wal-Mart Stores Inc. said its stores will start carrying the popular iPad. Intel Corp. shares remained in a tight range before the chipmaker releases its quarterly results after the closing bell.
In other corporate news, shares of King Pharmaceuticals Inc. surged after Pfizer Inc. agreed to buy the drugmaker for $3.6 billion in cash. Traders sold shares of CSX Corp. before the company reports results after the market close.
The Dow Jones industrial average rose 7.41, or 0.07 percent, to 11,017.75 in afternoon trading, while the Standard & Poor's 500 index rose 3.17, or 0.27 percent, to 1,168.49.
The Nasdaq composite index, which is heavily weighted with technology companies, rose 12.66, or 0.5 percent, to 2,414.99.
Treasury prices traded in a tight range. The yield on the 10-year Treasury note, which moves opposite to its price, was unchanged at 2.39 percent compared with late Friday. Bond markets were closed Monday for the Columbus Day holiday.
Stocks have rallied in recent weeks as traders bet the Fed will enact the bond-buying program as early as its next meeting, which ends Nov. 3. Buying bonds would drive interest rates and yields even lower, which makes stocks a more attractive investment.
Paul Brigandi, senior portfolio manager at Direxion Funds, said a pause in the market is normal because stocks have surged on expectations for Fed actions and upbeat earnings in the coming weeks. The Dow has risen 1.7 percent this month and is up about 10 percent since the beginning of September.
"A lot of the best-case scenarios are priced into the market right now," Brigandi said. Now investors want to pause and see if those scenarios play out, he said.
Google rose $0.93 to $539.54, while Apple climbed $3.37 to $298.70. King Pharmaceuticals rose $4.01, or 39.5 percent, to $14.16. Pfizer shares rose 3 cents to $17.52. CSX shares fell 72 cents to $57.44.
About three stocks fell for every two that rose on the New York Stock Exchange where volume came to 682 million shares.
Overseas, Britain's FTSE 100 fell 0.08 percent, Germany's DAX index fell 0.08 percent, and France's CAC-40 slid 0.5 percent. Japan's Nikkei stock average fell 2.1 percent, while Hong Kong's Hang Seng fell 0.4 percent.