US stocks tick up ahead of Fed decision

NEW YORK (AFP) - US stocks rose modestly on Wednesday ahead of the Federal Reserve's monetary policy announcement, with traders awaiting signals about when the central bank will lift its key near-zero interest rate.

About an hour into trade, the Dow Jones Industrial Average was up 29.92 points (0.17 per cent) at 17,161.89. The broad-based S&P 500 gained 3.60 (0.18 per cent) at 2,002.58 while the tech-rich Nasdaq Composite Index rose 8.67 (0.19 per cent) to 4,561.43.

The gains extended Tuesday's late rally driven in part by reports of a Chinese government stimulus plan. Those reports continued to lend support, Charles Schwab said in a market note.

Meanwhile US consumer prices fell in August for the first time in more than a year, fresh evidence of persistent tame inflation as the Fed meets for a second day to determine monetary policy. The central bank, in a statement around 2 a.m. Thursday Singapore time, is expected maintain its stance that it will not raise its key ultra-low interest rate before mid-2015.

Dow component DuPont rose 4.3 per cent after activist shareholder Nelson Peltz of Trian Partners called for a breakup of the chemical and agricultural seed company, arguing that its "conglomerate" structure has led to excessive costs and underperformance. DuPont defended its performance and said it welcomed "constructive dialogue" with Trian and other shareholders.

Package delivery giant FedEx gained 3.8 per cent as fiscal first-quarter earnings of US$2.10 (S$2.65) per share bested analyst expectations by 14 cents following a six percent gain in revenues.

United States Steel shot up 8.5 per cent after announcing that it was shelving plans for a pair of costly plant expansions in the US that would have cost some US$800 million. The company also said its Canadian subsidiary had applied for relief from creditors.

Rackspace Hosting, which provides cloud-computing services, sank 16.0 per cent after announcing that it would remain independent and not seek to sell itself. Rackspace determined its standalone growth plan was its best course to boost shareholder value. Rackspace also ruled out a share buyback program, concluding that it should "maintain flexibility" to ensure it makes sufficient investments to grow.

Bond prices rose. The yield on the 10-year US Treasury dipped to 2.58 per cent from 2.59 per cent on Tuesday, while the 30-year fell to 3.34 per cent from 3.35 percent.

Bond prices and yields move inversely.

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