Wednesday, August 29, 2012

Stocks rise; Fed sees gradual expansion

Economic data not good enough to discount QE3, analyst says

Portfolio Relevance
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks on Wednesday ended with mild gains that started just before the release of the Federal Reserve’s Beige Book, which found gradual economic expansion across the Fed’s 12 districts.
“The Beige Book indicated the economy is okay, at best, but it’s not rebounding so quickly that you have to discount chances of some type of move from quantitative easing, which is a near-term positive for the market,” said Robert Pavlik, chief market strategist at Banyan Partners. Read more on Beige Book.
But it’s too soon to tell if another monetary easing move by the central bank is completely priced in, Pavlik said.
“It’s going to depend on how they do it, and the size of the program they decide on,” said Pavlik, who believes any such move would come at the Federal Open Market Committee gathering in September.
After falling 22 points and rising 42, the Dow Jones Industrial Average DJIA +0.03%  ended 4.49 points higher, or less than 0.1%, at 13,107.48. That was the blue-chip index’s first gain in three days.
Verizon Communications Inc. VZ +0.98%  shares led gainers, rising 1%. Dow component and equipment maker Caterpillar Inc. CAT +0.09%  erased losses that came after competitor Joy Global Inc. JOY +2.56%  reduced its earnings and revenue forecast. Read news analysis on Joy Global, Caterpillar.
INVESTING | Trading Deck
QE3 and the looming currency war
If Federal Reserve Chairman Bernanke opens the door to more quantitative easing, an unstable situation will worsen, writes Michael Casey.
• Small-cap rally looks to Fed
• 5 money moves to make now
• Hulbert: Don't fret low volume
• Lynn: Back to gold standard? 
In position for a third monthly gain, the S&P 500 IndexSPX +0.08%   rose 1.19 point, or 0.1%, to 1,410.49, with telecommunications the best performing and energy the greatest laggard of its 10 sectors. It was also the first gain in three days for the S&P 500.
Among the biggest S&P 500 gainers, WellPoint Inc.WLP +7.68%  shares rose 7.7% after the insurer said Angela Braly resigned Tuesday as its chairman and chief executive officer. Read more on health-care stocks.
The Nasdaq Composite COMP +0.13%  advanced 4.05 points, or 0.1%, to 3,081.19. The index was up for four consecutive days, its longest winning streak since early July.
Volume was very low, in keeping with past sessions. There were nearly 510 million shares traded on the New York Stock Exchange. For every three stocks that advanced, two declined. Composite volume for NYSE-listed shares was just above 2.5 billion, the 11th session of volume under 3 billion this month. August is on track for its lowest monthly average since May 2007.

Fed factor

Wednesday’s release of the central bank’s collection of anecdotes comes two days before Fed Chairman Ben Bernanke’s speech at an annual symposium in Jackson Hole, Wyo.

Hulbert: Don't fret over volumes

Does August's trading volume seem too low?
Economic reports this week have failed to garner much of a reaction from investors at what’s typically a low-volume, lackluster time of the year for Wall Street, with many on vacation ahead of the Labor Day holiday.
And, what little focus investors seemed to have was almost exclusively drawn to Bernanke’s coming words.
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