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After The CloseStocks today picked up where they left off yesterday, rallying again on favorable economic data and optimism that the Federal Reserve would keep intact its ultra-aggressive monetary policy measures. At the end of the day, the Dow Jones Industrial Average had gained 138 points and the NASDAQ was up 30 points. Market breadth was strongly positive, with gainers topping losers by a two-to-one margin on the Big Board. There were also many more stocks hitting fresh 52-week highs than lows.

At the sector level, shares of industrial companies shined brighter than most. Dow component General Electric (GE - Free GE Stock Report), which makes aircraft engines and household appliances, turned in a strong session, for example.

Consumer cyclical stocks, including Tesla Motors (TSLA) also had a good showing.

Another company in the news today was Prudential Financial (PRU). The insurance giant held its annual analyst day today and noted that business was largely on track. Its shares, which have surged in recent months, rose in tandem with the broader market averages. 

On the down side, Hormel Food’s (HRL) stock price lost ground when the prepared food maker lowered its earnings guidance, citing higher input costs and slower sales. 

In commodities, oil prices added 67 cents a barrel, closing at $98.44 ahead of the industry’s weekly supply data due out on Wednesday. Violence in Syria, an oil producer, has pushed quotations higher of late. Gold prices sank $17.50 an ounce, though.

Tomorrow brings the much anticipated end to the Federal Reserve’s two-day policy meeting and a subsequent briefing by its Chairman, Ben Bernanke. On the one hand, the Fed’s unprecedented stimulus is producing the desired results in the economy, albeit gradually. However, there is some concern over what may happen in the future, specifically with regard to inflation, if the nation’s lead bank were to keep expanding its balance sheet. There is further concern that the Federal Reserve may have painted itself into a corner, regarding stock market expectations. The worry is that a policy change could spark a global selloff, which the Fed would greatly prefer to avoid.  

For his part, Mr. Bernanke has tried to be mindful of the lessons of history, and not pull the plug too soon on measures aimed at bringing the economy out of the deep slump it was in a few short years ago. Wall Street will be listening closely to see if any shift in policy is indicated. - Robert Mitkowski

At the time of this writing, the author did not have any positions in of the companies mentioned.                                   

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12:15 PM EDT - Wall Street continued to proceed with caution on Tuesday morning, with many participants in watchful anticipation of any news from the Fed. Today’s economic releases were again favorable. Consumer prices showed a modest 0.1% gain for the month of May, indicating no major threat on the inflation front. Meanwhile, the housing market continues to trend in the right direction. Specifically, housing starts in May came in at a seasonally adjusted annual rate of 914,000 units. Although this was a little bit lower than expected, it was 29% higher than the pace last May.

Instead, the Federal Reserve’s two-day monetary policy meeting (which concludes tomorrow) will be drawing the lion’s share of the market’s attention. The main concern is whether or not the central bank will continue its economic stimulus strategy of heavy bond buying. This is fundamentally important to the stock market because strong support for bonds translates into lower bond yields. And when bond yields are low, it makes holding stocks more attractive. And indeed, this has played a key part in the equity markets’ solid advance so far this year.

Our sense is that, with inflation relatively benign and employment levels less than ideal, there is little likelihood that the Fed will soon abandon its accommodative policies. However, the market is notoriously forward looking, and any indication of a change in plans could result in a setback in share prices. Indeed, such was the case in late May, when Fed Chairman Ben Bernanke hinted that there could be a slowing in the Fed’s $85 billion-a-month bond buying program.

For now, U.S. equity markets appear to be banking on the Fed staying the course. The Dow Jones Industrials, S&P 500, and NASDAQ composite have all risen steadily throughout the morning and, at the noon hour in New York, were all showing gains of about three-quarters of a percentage point. Meanwhile, across the Atlantic, trading has been a bit less enthusiastic. London’s FTSE 100 is faring the best among the major bourses, advancing a bit more than half a percentage point as it headed for its close. Germany’s DAX was holding on to a fractional gain for its session, while France’s CAC 40 fell just below break even. -Mario Ferro 

At the time of this article’s writing, the author did not have positions in any companies mentioned.

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Stocks to Watch from The Survey Corporate news is light ahead of the bell today. On the earnings front, shares of FactSet Research Systems (FDS) are down moderately in pre-market trading, after the provider of financial and economic data reported May-quarter results that did not resonate with investors. The stock of Hormel Foods (HRL) is also down in the premarket, after the packaged foods and meat producer cut its fiscal 2013 (ends in October) guidance.

Elsewhere, shares of Sony (SNE) are indicating a modestly higher opening this morning, after hedge fund Third Point, which is run by Daniel S. Loeb, increased its stake in the Japan-based electronics company and again called for it to spin off its entertainment business. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The U.S. equity market jumped out to a fast start yesterday, with each of the major indexes up more than 1% in the early stages of trading. However, much like has been the case for the better part of a month now, investors were taken on a rollercoaster ride during the latest session. Indeed, a good portion of the early gains were at one point pared, only to see the buyers return once again late in the day to push the indexes higher. By the closing bell, the Dow Jones Industrials, the NASDAQ Composite, and the broader S&P 500 Index had added 110, 29, and 12 points, respectively.

As noted, it was another volatile performance for the U.S. equity market, and the intraday gyrations will probably continue at least until the Federal Reserve concludes its two-day monetary policy meeting tomorrow. At that time, investors get some clarity about the lead bank’s intentions with regard to monetary policies. The market has been volatile since late May when Federal Reserve Chairman Ben Bernanke hinted that the central bank would consider slowing its $85 billion-a-month bond-buying program. Historically, a cutback in stimulus measures is never good for the performance of stocks. Such a scenario is making investors a bit skittish these days. Tomorrow afternoon’s trading will likely be heavily influenced by the Federal Reserve’s remarks.

Investors, particularly those with short-term horizons, have not made many significant commitments ahead of the Federal Open Market Committee meeting. The subsequent low daily trading volume is also playing a huge role in the market’s volatile performance of late.

Meantime, the new day has brought some important reports on the U.S. economy. A short time ago, we learned that consumer prices increased a nominal 0.1% in the month of May. The benign reading, combined with last Friday’s tame report on producer (wholesale) prices, could play into the Federal Reserve’s thinking. The lack of inflation is certainly not pressuring the lead bank to end its accommodative monetary policies. Also at 8:30 A.M. (EDT), we received another significant report on the housing market. Specifically, housing starts in May came in at 914,000 units, which, while short of the consensus expectation, was 6.8% above the revised April estimate of 856,000 and 28.6% higher than the year-earlier figure. This, along with yesterday’s excellent reading from the National Association of Home Builders/Wells Fargo Housing Market Index, is another positive development for the steadily improving housing market.

With less than a half-hour to go before the start of trading on these shores, the U.S. equity futures presage a modestly higher opening for our market. Overnight, Asia’s indexes finished mixed. Meanwhile, the major European bourses are modestly higher, as trading moves to the second half of the session on the Continent. Our sense is that it will likely be another volatile session ahead of the Fed's next move. Stay tuned. – William G. Ferguson 

At the time of this article’s writing, the author did not have positions in any of the company’s mentioned.