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Wall Street higher as Fed begins meetings

By Joe Bel Bruno
Associated Press

NEW YORK » Wall Street advanced sharply yesterday as the Federal Reserve opened a two-day meeting expected to bring another interest rate cut to revitalize the U.S. economy.

The Fed's rate decision is clearly the market's focus this week, and trading has been marked by investors' conjectures about policymakers' thoughts on the weak economy and crunched financial industry. With an announcement not expected until this afternoon, the market in the meantime digested data on earnings, consumer spending and durable goods.

Investors did get some encouragement about the economy after the Commerce Department said orders for big-ticket items rose 5.2 percent in December, the widest jump in five months. In addition, the Conference Board reported consumer confidence fell in January -- pretty much as expected.

Economic data will continue to be scrutinized as investors try to determine what the Fed's take is on the economy. Investors are angling for a half-point cut following an emergency three-quarter-point cut last week.

"The market is just in a holding pattern," said Todd Leone, managing director of equity trading at Cowen & Co. "It seems we've hit a short-term bottom, and the market has been stabilizing as we wait to hear what the Fed says."

The Dow Jones industrial average rose 96.41, or 0.78 percent, to 12,480.30. The blue chip index closed near its high of the day.

Broader indexes also rose. The Standard & Poor's 500 index rose 8.34, or 0.62 percent, to 1,362.30, and the Nasdaq composite advanced 8.15, or 0.35 percent, to 2,358.06. The Russell 2000 index of smaller companies rose 2.81, or 0.40 percent, to 705.20.

Advancing issues led decliners by a 2-to-1 basis on the New York Stock Exchange, where volume came to 1.34 billion.

Government bond prices fell as stocks rose, indicating that investors feel less need for the safety of Treasurys. The 10-year Treasury note's yield, which moves opposite its price, was at 3.66 percent, up from 3.58 percent late Monday.

The dollar was mixed against most major currencies, and gold prices fell.

Oil prices moved higher as traders waited to see what the Fed's next move will be. A barrel of light sweet crude rose 65 cents to $91.64 a barrel on the New York Mercantile Exchange.

Wall Street has been extremely volatile in recent weeks amid fears of a U.S. recession and further write-downs in the financial sector. However, that has given way to a more quiet tone this week as investors looked for their second-straight day of gains before the Fed's decision.

Central bankers are widely expected to lower its key rate, now at 3.5 percent, by as much as one-half percentage point to 3 percent when policymakers wrap up later today. This will be the last meeting for seven weeks, but that doesn't rule out another emergency cut in the meantime.

But, all of this has done little to convince investors that Wall Street will return to the high levels seen in October anytime son. Since most investors have priced in a rate cut, the market might still continue to trend lower until the economy shows signs the Fed's policy is working, analysts said.




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