Wall Street edges up on stimulus hopes
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Reuters – <abbr title="2012-09-11T17:29:15Z" style="border: 0px; font-variant: normal; ">7 minutes ago</abbr></cite>
Traders work on the floor of the New York Stock Exchange, July 10, 2012. REUTERS/Brendan McDermid
By Aleksandra Michalska
NEW YORK (Reuters) - Stocks moved higher in quiet trading on Tuesday ahead of a key ruling by a German court and possible policy action from the Federal Reserve that could point to more monetary stimulus.
Wall Street's advance was led by energy, industrial and financial firms, but volume was light.
Last week, equities rallied on expectations for fresh stimulus measures from central banks, with economists forecasting a 60 percent chance the Fed will announce another round of quantitative easing at the conclusion of its two-day meeting this Thursday.
Some investors have concerns, however, that action by the Fed could distort market prices and would not be beneficial.
"I don't want the Fed to do anything," said Peter Cook, chief investment officer at Performance Trust Investment Advisors, LLC. "But the market is up, which makes you think some kind of quantitative easing is coming."
Germany's Constitutional Court on Wednesday is expected to approve the European Stability Mechanism -- the euro zone's new bailout fund -- but legal experts believe it will impose tough conditions limiting Berlin's flexibility on future rescues. A more stringent ruling could be seen as a negative by markets.
Another event which could cause turbulence in markets is a Dutch general election on Wednesday, with voters divided between bailouts for troubled euro zone economies and austerity measures locally.
The Dow Jones industrial average (^DJI) was up 82.90 points, or 0.63 percent, at 13,337.19. The Standard & Poor's 500 Index (^GSPC) was up 5.90 points, or 0.41 percent, at 1,434.98. The Nasdaq Composite Index (^IXIC) was up 4.33 points, or 0.14 percent, at 3,108.35.
Investors are keeping an eye on big-cap bellwether technology names because of their role in global business spending. Techs fell on Monday following Intel's (INTC) warning last week that reduced demand will hurt its third-quarter results. Shares were up 1.3 percent Tuesday.
"I think Intel is the model for what we are going to be seeing over the coming earnings season, which is going to be missing estimates and lowering guidance across the sectors," said Cook.
McDonald's Corp (MCD) advanced 0.1 percent to $91.48 after the fast-food restaurant chain reported a 3.7 percent rise in August sales at established restaurants around the world, slightly below expectations of a 3.9 percent increase.
Package delivery companies FedEx Corp (FDX) and United Parcel Service Inc (UPS) have received approval to provide express-package services in some cities of China on their own, the country's State Postal Bureau (SPB) said on its website last week. FedEx gained 0.97 percent to $88.82 and UPS rose 0.61 percent to $73.48.
Knight Capital Group Inc (KCG) said it has hired International Business Machines Corp (IBM.N) to look into the August 1 trading glitch that cost the trading firm $440 million and forced it to accept a $400 million investment from a group of financial companies to keep it afloat. Knight shares were up 0.7 percent to $2.69 while IBM rose 1.09 percent to $203.15.
Zynga Inc's (ZNGA.O) chief marketing officer resigned on Monday, becoming the latest senior executive to depart the struggling social games company behind popular Facebook Inc (FB.O) games such as Farmville. Zynga shares dropped 0.29 percent to $2.82.
(Editing by Dave Zimmerman)
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