S&P and Nasdaq lifted by banks, Fed minutes; Dow slips
The S&P 500 and Nasdaq rose modestly on Tuesday as the banking sector got a lift from positive analyst comments, while minutes from the Federal Reserve's last meeting eased concern over rising rates.
The minutes suggested the central bank could keep interest rates at ultra-low levels longer than investors have anticipated if the economy worsens. Lower rates support financial shares, which have been at the center of the market's year-long rally.
Bank of America
The three major U.S. stock indexes moved in a tight range, but perked up after the release of the Fed minutes at 2 p.m.
The crisis seems to be contained, but there is still enough uncertainty and enough high unemployment that the Fed looks like they will have loose monetary policy for an extended period of time, said Doug Roberts, chief investment strategist at Channel Capital Research.com, in Shrewsbury, New Jersey.
The Dow continued to eye the psychologically important 11,000 level, coming within 13 points of the mark in afternoon trading in a brief run into positive territory after the Fed's minutes. The Dow last crossed that mark in September 2008.
By the close, though, the Dow's slim gain had evaporated, and it ended just below break-even as Travelers Companies Inc
The Dow Jones industrial average <.DJI> eased 3.56 points, or 0.03 percent, to finish at 10,969.99.
But the Standard & Poor's 500 Index <.SPX> added 2.00 points, or 0.17 percent, to 1,189.44. The Nasdaq Composite Index <.IXIC> rose 7.28 points, or 0.30 percent, to 2,436.81.
Earlier, the S&P 500 hit an 18-month intraday high at 1,191.80, and the Nasdaq touched a 19-month intraday high at 2,443.50.
Even though the broad market eked out a gain, some technical indicators measuring momentum suggest the S&P 500 has been overbought for the last two weeks.
VIX LOWEST SINCE EARLY OCTOBER 2007
Meanwhile, Wall Street's fear gauge, the CBOE Volatility Index <.VIX> or the VIX, fell 4.6 percent to end at 16.23, its lowest close since October 9, 2007. On that day, the S&P 500 closed at 1,565.15, its all-time closing high.
Regional banks' shares rose after Credit Suisse increased its price target on two smaller banking companies, Regions Financial Corp
Regions Financial gained 4.4 percent to $8.55, while Synovus Financial advanced 6.2 percent to $3.62. The KBW regional banks index <.KRX> rose 3.1 percent, closing at its highest level since early January 2009.
The Nasdaq garnered support from Amazon.com
Home builders' stocks slid as rising Treasury yields raised worries about higher mortgage rates, while KB Home
Higher mortgage rates would pose a significant hurdle for a recovery in the housing sector. The 10-year Treasury note's yield reached 4 percent in intraday trade on Monday, though its yield slipped to 3.96 percent on Tuesday as bargain hunters stepped in to buy some debt and push prices up slightly.
About 7.44 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 17 to 13, while on the Nasdaq, five stocks rose for every four that fell.
(Reporting by Leah Schnurr; Additional reporting by Chuck Mikolajzcak; Editing by Jan Paschal)
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