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US stocks rally ahead of Fed rate decision

US stocks rallied  Wednesday as investors awaited the Federal Reserve’s interest rate decision and possible changes in its pump priming of the recession-mired economy.

The Dow Jones Industrial Average gained 124.92 points (1.35 percent) to 9,366.37 at 1605 GMT.
The tech-heavy Nasdaq composite climbed 33.54 points (1.70 percent) to 2,003.27 and the broad-market Standard  Poor’s 500 index advanced 13.22 points (1.33 percent) to 1,007.57.

After opening with modest gains, the major indices surged as investors anticipated the Fed would say its economic outlook has improved, analyst Peter Cardillo of Avalon Partners said.
The Federal Open Market Committee (FOMC), winding up a two-day policy-setting meeting, is expected to announce its interest rate decision around 2:15 pm (1815 GMT). The market expects the central bank to hold its key rate at nearly zero.

“The accompanying policy statement is likely to be the attention grabber, as it may provide some clues to where policymakers stand on the outlook for the economy and if changes are needed to its accommodative stance,” Charles Schwab  Co. analysts said in a client note.

Investors welcomed the latest US trade deficit figures which signaled a pick-up in global demand. The Commerce Department reported the trade gap rose slightly in June, but less than economists expected and solely due to surging oil prices, while exports and imports increased.

“These recent deficit levels still sound high, but all in all they are the lowest adjusted figures of this decade,” said Jon Ogg of 24/7WallSt.com.
The tech sector gained support from Applied Materials, up 4.54 percent at 13.82 dollars on better than expected quarterly earnings.

Microsoft rose 1.95 percent to 23.58 dollars after announcing a deal with Nokia to make Microsoft Office software available on smartphones made by the Finnish company.
JPMorgan Chase climbed 2.52 percent to 42.29 dollars. The Wall Street Journal reported the firm wants to sell 23 office properties for more than one billion dollars.

Bank of New York Mellon leapt 3.46 percent to 29.03 dollars after buying an investment subsidiary of Britain’s Lloyds Banking Group, Insight Investment, for 386 million dollars.
Government-rescued insurer AIG jumped 4.21 percent to 25.97 dollars. It has completed the sale of its energy and infrastructure assets for 1.9 billion dollars.

Soft drinks and snacks maker Pepsico inched up 0.19 percent to 57.02 dollars after buying Amacoco, the leading Brazilian maker of coconut juice beverages.
US stocks skidded Tuesday for a second day running as investors were on tenterhooks for the results of the latest FOMC meeting. The Dow fell 1.03 percent.

The bond market slipped. The yield on the 10-year US Treasury bond edged up to 3.697 percent from 3.693 percent Tuesday and that on the 30-year bond rose to 4.468 percent from 4.453 percent. Bond yields and prices move in opposite directions.


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