U.S. stocks eked out a slim gain, after minutes from a September meeting of the Federal Reserve increased confidence that the central bank will take further action to stimulate the economy.
The Dow Jones Industrial Average gained 10.06 points, or 0.1% to close at 11020.4. The Nasdaq Composite added 15.59 points, or 0.7% to 2417.92, and the Standard & Poor’s 500-stock index advanced 4.45 points, or 0.4% to 1169.77.
After a morning in the red, stocks turned positive Tuesday after minutes from the central bank’s September meeting showed officials’ discussions focused on buying more Treasurys or on new strategies for inflation if prices remained too low and unemployment too high. The minutes also disclosed that the Fed’s staff cut the projections for economic growth in 2011 and expected the underlying inflation rate, already below the central bank’s informal objective, to slow further next year.
“What the Fed said today didn’t surprise anybody,” said Bill Vaughn, portfolio manager at Evercore Wealth Management. “Most people thought the comments were going to lay the groundwork for quantitative easing, and they essentially did that.”
Investors have been expecting the Fed to unveil additional stimulus measures at its November meeting, which has driven the dollar lower and stocks higher in recent weeks.
The dollar had been up earlier in Tuesday’s session, but the U.S. currency returned to its recent slump following the Fed minutes as additional stimulus is expected to lower the value of the dollar. Gold futures climbed, reversing an earlier decline.
Treasurys fell, with the yield on the 10-year rising to 2.419% as tepid demand on a three-year-note sale suggested the ultralow yield levels have started to turn some investors away.
Financial and technology companies led the gains in stocks ahead of earnings reports due from Intel and J.P. Morgan Chase. Before reporting, Intel gained 21 cents, or 1.1% to 19.77. After the close, the chip maker reported that third-quarter profit climbed 59% and revenue topped $11 billion for the first time. Intel’s shares were higher in after-hours trading.
J.P. Morgan, which will release its report Wednesday, climbed 67 cents, or 1.7%, to 40.40. Meanwhile, Bank of America led the Dow, gaining 37 cents, or 2.8%, to 13.52.
However, the energy, industrial and materials sectors fell as concerns were reignited over the potential impact of tightening measures from China. The country’s central bank late Sunday moved to temporarily raise its reserve requirements on six banks in an effort to manage liquidity and cope with inflationary pressure.
“The worry is that anything that China does might turn their boom into a bust,” said Bill Stone, chief investment strategist at PNC Wealth Management.
Elsewhere, Pfizer edged up 10 cents, or 0.6%, to 17.48, after the drug company said it will buy King Pharmaceuticals for $3.6 billion, the latest move by a big drug company to swallow up a rival as the industry faces patent-expiration woes. King Pharmaceuticals soared $3.99, or 39%, to 14.14.
Global Payments lost $3.44, or 8.1%, to 38.90, after the payments processor said its fiscal first-quarter earnings fell 15% and its core profit unexpectedly slid despite a moderate revenue climb.
Digital-identity assurance firm ActivIdentity gained 97 cents, or 43%, to 3.23, after Swedish lock maker Assa Abloy said it entered into an agreement to buy the company in a deal valued at $162 million.