The Dow and S&P 500 closed at fresh all-time highs on Tuesday, a day before a US Federal Reserve decision that is expected to maintain its aggressive monetary stimulus.
The Dow Jones Industrial Average rose 111.42 points (0.72 per cent) to 15,680.35, while the S&P 500-stock index jumped 9.84 (0.56 per cent) to 1,771.95.
The Nasdaq Composite Index also closed higher, up 12.21 (0.31 per cent) at 3,952.34.
The gains came on the heels of a trove of largely mediocre economic data that is seen as boosting the chances the Fed will wrap up a two-day meeting on Wednesday, announcing it will keep unchanged its $US85 billion ($A89.9 billion) per month bond-buying program.
Economic data showed a 0.1 per cent fall in retail sales and a 0.1 per cent drop in producer prices, indicating weak inflation, in September. Home prices rose 12.8 per cent year-on-year rise in August, but the monthly gains were slowing.
US consumer confidence plummeted to 71.2 in October from 80.2 the previous month, reflecting worries about the Washington budget and debt ceiling battle that partially closed the federal government for 16 days.
“The Fed has been pretty clear about making decisions dependant on data and the data the Fed has received since the last meeting have certainly not been upbeat,” said Art Hogan, head of product strategy equity research at Lazard Capital Markets.
“So therefore, making a move towards tapering would be difficult to explain.”
The Dow got a boost from solid earnings from Pfizer, up 1.7 per cent, and IBM’s announcement of a $US15 billion additional share buyback program that lifted the technology company’s shares by 2.7 per cent.
Other big gains on the Dow were posted by AT&T (+2.0 per cent), Home Depot (+1.9 per cent) and Procter & Gamble (+1.4 per cent).
Within the Nasdaq, outperformers included Google (+ 2.1 per cent) and eBay (+2.6 per cent).
Tech giant Apple fell 2.5 per cent. While fiscal fourth-quarter earnings exceeded expectations by 33 cents at $US8.26 per share, the company’s gross margin narrowed to 37 per cent from 40 per cent a year ago.
“Shares finished lower as the company’s 1Q gross margin guidance had a midpoint that was below expectations,” Charles Schwab & Co said in a market note.
Bank of America declined 0.6 per cent after Fitch fingered the banking giant as the most exposed to a large settlement with the Federal Housing Finance Agency.
This followed rival JPMorgan Chase’s agreement last week to a $US5.1 billion settlement to resolve charges it overstated the quality of mortgages and mortgage-backed securities it sold to Freddie Mac and Fannie Mae.
Bank of America could end up paying $US5-$US8 billion, Fitch said.
The yield on the 10-year US Treasury held steady at 2.51 per cent, the same level as Monday, while the 30-year rose to 3.62 per cent from 3.60 per cent.
Bond prices and yields move inversely.
