Stocks creep higher as Federal Reserve meeting starts
U.S. stocks inched higher Tuesday in another cautious day of trading as investors kept an eye on central banks in the U.S. and Japan. Healthcare and household goods companies led the way, while energy companies slipped.
Major market indexes were higher all day but returned most of those gains at the close of trading. They rose just enough to cancel out Monday’s small losses.
Drug companies helped healthcare stocks make modest gains, while Exxon Mobil fell on reports that it’s being investigated by securities regulators. Bond yields slipped, and the dollar was little changed as investors awaited decisions from the Federal Reserve and the Bank of Japan.
Since investors doubt the Federal Reserve will raise interest rates Wednesday, they may focus instead on the Fed’s statement and a news conference led by Fed Chief Janet L. Yellen.
“The Fed, until they raise rates, are going to be the primary focus of the markets,” said J.J. Kinahan, chief market strategist at TD Ameritrade. “The only reason people may take their eye off of that is the election.”
The Dow Jones industrial average rose 9.79 points, or 0.1%, to 18,129.96. The Standard & Poor’s 500 index edged up 0.64 of a point to 2,139.76. The Nasdaq composite advanced 6.33 points, or 0.1%, to 5,241.35.
On the New York Stock Exchange, more stocks fell than rose. That was the reverse of Monday, when major indexes fell but more stocks were up than down.
Tuesday was the start of two-day meetings for the Fed and Bank of Japan. Investors didn’t expect an increase in U.S. interest rates, but the Japanese central bank is expected to take new steps to boost that nation’s ailing economy. That could include an increase in its stimulus program or a further cut in the deposit rate as a way to encourage banks to lend money.
Gilead Sciences climbed 3.5% to $81.78 after the hepatitis C drugmaker completed a $5-billion debt offering. The Foster City, Calif., company said it may use the cash to make a deal, and Jefferies & Co. analyst Brian Abrahams said he thinks it is getting close to at least one acquisition. Elsewhere, Merck rose 1% to $61.94.
Ascena Retail Group, the parent of Ann Taylor, Lane Bryant and Dress Barn, dived 29.9% to $5.69, a six-year low, after the company reported weak quarterly results and gave a forecast that fell short of investor expectations. Ascena, which bought Ann Taylor a year ago, also struggled with discounts from competitors and shaky demand.
Tobira Therapeutics skyrocketed 721% to $38.91 after Allergan, the maker of Botox, agreed to buy the South San Francisco company. Tobira is studying drugs that treat symptoms of nonalcoholic steatohepatitis, a disease that triggers inflammation that can lead to cirrhosis, cancer and liver failure.
Tobira stock has tumbled this year after it reported mixed results from a mid-stage trial of one of its drugs. The shares finished at $4.74 on Monday, but Allergan agreed to pay $28.35 per share upfront, and could pay an additional $49.84 if Tobira’s drugs succeed in clinical testing, win regulatory approval and meet sales targets. Allergan shares fell 2.7% to $238.67.
The Commerce Department said the pace of home construction slowed in August as fewer homes were built in the South. Monthly housing figures can be volatile, and housing starts have grown this year, but the report hurt shares of homebuilders. PulteGroup fell 2.9% to $19.29, and Lennar, despite posting strong quarterly results, sank 3.5% to $43.50. Los Angeles-based KB Home, which also posted quarterly earnings Tuesday that beat analyst estimates, fell 2.4% to $14.93.
Hotel chains Marriott and Starwood climbed after regulators in China approved the $14.4-billion deal that will bring them together to create the world’s largest hotel chain. Marriott, which is buying Starwood, said it expects to complete the deal Friday. Its stock rose 2.3% to $69.94, and Starwood shares rose 2.4% to $76.90.
Royal Caribbean Cruises advanced 4.5%, to $68.41 after the company raised its quarterly dividend to 48 cents from 37.5 cents.
Bond prices rose. The yield on the 10-year U.S. Treasury note fell to 1.69% from 1.71%. The dollar rose to 101.84 yen from 101.81 yen. The euro slipped to $1.1157 from $1.1178.
Benchmark U.S. crude rose 14 cents to $43.44 a barrel. Brent crude, used to price international oils, slipped 7 cents to $45.88 a barrel. Exxon Mobil shares fell 1.5% to $82.54 after Dow Jones reported that the Securities and Exchange Commission is investigating the company’s accounting practices and other issues.
In other energy trading, wholesale gasoline sank 6 cents, or 4%, to $1.36 a gallon. Heating oil rose 1 cent to $1.41 a gallon. Natural gas climbed 11 cents, or 3.9%, to $3.05 per 1,000 cubic feet.
Gold rose 40 cents to $1,318.20 an ounce. Silver fell 1 cent to $19.28 an ounce. Copper rose 1 cent to $2.17 a pound.
France’s CAC 40 slipped 0.1% while Germany’s DAX rose 0.2%. In Britain, the FTSE 100 index was up 0.3%. Tokyo’s benchmark Nikkei 225 closed down 0.2% and South Korea’s Kospi advanced 0.5%. The Hang Seng in Hong Kong slipped 0.1%.
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