US stocks rise ahead of expected Fed taper

In this Monday, Sept. 16, 2013, file photo, specialist Frank Masiello works on the floor of the New York Stock Exchange. US stocks Tuesday closed higher amid greater investor confidence that the US economy could withstand an expected reduction o
In this Monday, Sept. 16, 2013, file photo, specialist Frank Masiello works on the floor of the New York Stock Exchange. US stocks Tuesday closed higher amid greater investor confidence that the US economy could withstand an expected reduction of Federal Reserve bond purchases. -- PHOTO: AP

NEW YORK (AFP) - US stocks Tuesday closed higher amid greater investor confidence that the US economy could withstand an expected reduction of Federal Reserve bond purchases.

The Dow Jones Industrial Average put on 34.95 (0.23 per cent) at 15,529.73.

The broad-based S&P 500 added 7.16 (0.42 per cent) at 1,704.76.

The tech-rich Nasdaq Composite Index jumped 27.85 (0.75 per cent) to 3,745.70, its highest close since September 2000.

A two-day meeting of the Federal Open Market Committee is scheduled to conclude Wednesday with a statement and news conference with Federal Reserve Chairman Ben Bernanke. Most market watchers expect the Fed to scale back the Fed's $85 billion per month bond-buying programme.

The market expects the Fed to reduce the programme by US$10 billion to US$15 billion (S$12.6 billion to S$18.9 billion), said Michael James, managing director of equity trading at Wedbush Securities.

A larger taper "might cause a little bit of market weakness," James said.

"Anything else is priced in." "People are getting more comfortable with the Fed taking their foot off the pedal," Mr James said. "We're not expanding at a fantastic rate, but we're doing okay." Technology companies performed strongly with Apple and Facebook reversing recent declines. Apple added 1.2 per cent and Facebook advanced 6.0 per cent.

Other technology firms to see gains included Dow member Intel, up 1.5 per cent after a Credit Suisse upgrade, and Amazon, up 2.7 per cent.

Dow component Microsoft rose 0.4 per cent after raising its dividend by 22 per cent and announcing a new US$40 billion share buyback programme to replace a programme that expires at the end of September.

Banking giant JPMorgan Chase slipped 0.1 per cent after The Wall Street Journal reported the bank may face criminal charges over the "London whale" trading losses. The bank is reportedly close to settling civil charges in the matter with US and British regulators.

Safeway soared 10.5 per cent after activist fund Jana Partners disclosed that it took a 6.2 per cent stake in the supermarket chain. The company enacted a so-called "poison pill" measure intended to prevent a hostile takeover.

Internet radio company Pandora rose 5.0 per cent after announcing a public offering of 10 million additional shares. The proceeds will go to general corporate purposes and potential acquisitions.

Bond prices rose. The yield on the 10-year Treasury dropped to 2.85 per cent from 2.87 per cent, while the 30-year slipped to 3.84 per cent from 3.87 per cent.

Prices and yields move inversely.