By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks gained Wednesday for a
second straight day as Ford Motor Co. posted its best retail-sales
month in seven years, while investors kept one eye trained on the
debate over prospective U.S. military strikes against Syria.
"Everybody was so focused on political dysfunction with the
coming debt-ceiling debate, and this latest international crisis
has shown a very unusual bipartisanship coming out of Washington,"
said Ron Florance, Wells Fargo's deputy chief investment officer
for investment strategy.
After an early 35-point retreat, the Dow Jones Industrial
Average (DJI) rose as much as 123 points and finished up 96.91
points, or 0.7%, at 14,930.87.
"The short-term volatility is all around how the world is going
to respond to a humanitarian crisis," Florance added.
The Federal Reserve released its Beige Book survey of economic
conditions, which found the U.S. economy grew at a modest to
moderate pace in July and August and offered few new clues as to
the timing and scale of the anticipated cutback in the Fed's $85
billion in monthly bond purchases.
The central bank's report confirmed it is "moving down the road
of being able to pull their foot off the accelerator in the fourth
quarter," said Florance.
"I wish they would start it sooner, rather than later. People
will realize that going from $85 billion to $65 billion, or
whatever number they pick, is not going to be a catastrophic
event," said Florance.
Intel Corp. (INTC) set the pace as 26 of the Dow's 30 components
rose. Leading blue-chip losses, Microsoft Corp. (MSFT) fell 2.2%
after Morgan Stanley cut its rating on the software maker following
its deal to acquire Nokia Corp.'s (NOK) devices business.
Benchmark indexes traveled to session highs as U.S. Secretary of
State John Kerry and Secretary of Defense Chuck Hagel spoke at a
House hearing on the White House request for congressional approval
of a limited strike against the Syrian regime.
The Senate Foreign Relations Committee in the afternoon approved
a resolution supporting the use of U.S. military force in
Syria.
The S&P 500 index (SPX) advanced 13.31 points, or 0.8%, to
1,653.08, with telecommunications and health care the best
performers and utilities the sole decliner among its 10 major
industries.
Shares of E-Trade Financial Corp. (ETFCD) rallied 8.1% after the
company said regulators had approved its request to use capital
from its bank subsidiary for wider corporate purposes.
Bolstering technology shares, Apple Inc. (AAPL) rose $10.11, or
2.1%, to $498.69 after Cantor Fitzgerald LP started coverage of its
shares with a buy rating and a 12-month target of $777. Apple has
scheduled a Sept. 10 event to display its new iPhone models and
further stoked investor optimism by announcing a second event in
Beijing a day later.
Shares of LinkedIn Corp. (LNKD) fell 2.9% after the
professional-networking site said in a securities filing it would
sell 4.17 million shares of its Class A stock, estimating it would
reap $1 billion.
The Nasdaq Composite (RIXF) rose 36.43 points, or 1%, to
3,649.04.
The Nasdaq (NDAQ) experienced another glitch with its main data
feed, which halted trading for roughly three hours almost two weeks
ago. The exchange said the outage affected its ability to transmit
quotes in stock symbols "PC" through "SPZ." The trouble has been
resolved, and trading was not impacted, Nasdaq said.
Advancers pulled ahead of decliners by a more than 2-to-1 ratio
on the New York Stock Exchange, where 728 million shares traded.
Composite volume surpassed 3.2 billion.
Ford shares (F) rallied 3.5% after the vehicle manufacturer
reported a spike in sales last month from a year earlier and hiked
its production plan for the fourth quarter.
"Equity investors appear to be reacting to a positive outlook
reflected by Ford's decision to boost output -- itself a sign that
a Fed tapering would arrive as the economy is strengthening, not
weakening," wrote Andrew Wilkinson, chief economic strategist at
Miller Tabak & Co., referring to the consensus expectation that
the Federal Reserve would begin scaling back its monetary stimulus
later this month.
"People are catching up to the news that has been coming out
around manufacturing here, and better consumption in the global
marketplace that is supporting our economy, and Europe has turned,"
said Florance.
In a televised news conference with Sweden's prime minister,
President Barack Obama continued to make his case for a military
response to the alleged use of chemical weapons against civilians
in Syria last month.
"We believe very strongly, with high confidence, that chemical
weapons were used; we want to join with the international community
for an effective response," Obama said. "Even Syria doesn't deny
they were used; the only remaining dispute is who used them." Obama
was in Stockholm, en route to a Group of 20 meeting in St.
Petersburg, Russia, while his top national-security aides briefed
lawmakers in public and private hearings on Capitol Hill.
The president also said the world should not find excuses not to
act and that he believes a strong message can be sent to the Syrian
regime.
"It was this reach-out in such terms that resulted in the drop
in oil and gold," said Peter Boockvar, chief market strategist at
the Lindsey Group LLC, in emailed comments.
On the New York Mercantile Exchange, both crude and gold futures
fell, with oil (CLV3) down $1.31, or 1.2%, at $107.23 a barrel and
gold (GCZ3) losing $22, or 1.6%, to $1,390 an ounce.
The U.S. dollar (DXY) edged lower against currency rivals
including the euro (EURUSD). Longer-dated U.S. Treasury prices
fell, with the yield on the 10-year note (10_YEAR) rising 5 basis
points to 2.898%.
Ahead of Wednesday's Beige Book release, San Francisco Fed
President John Williams had said the central bank should start
curtailing stimulus later this year and stop it altogether by the
middle of next year, so long as the labor market continues to
improve and inflation rises toward 2%.
On Friday, the government releases U.S. payrolls data for
August, with the monthly report coming a day after Automatic Data
Processing Inc. releases hiring data for last month. The labor
market is a concern of the Fed and would likely factor into any
decisions made at the Federal Open Market Committee gathering later
this month.
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