US stocks closed with modest gains on Tuesday after newly released minutes from the Federal Reserve’s key policy committee raised hopes that the Fed would act to boost the ailing economy.
The Dow Jones Industrial Average rose 20.70 points (0.18 per cent) to close at 11,559.95. The broader S&P 500 climbed 2.84 points (0.23 per cent) to 1,212.92, while the tech-heavy Nasdaq Composite jumped 14.00 points (0.55 per cent) to close at 2,576.11.
After opening with losses, the markets crept upwards and closed higher after minutes of the August 9 meeting of the Federal Open Market Committee showed members discussing what to do if the economy continued to stall.
The committee has been deeply split between those who believe the Fed should further loosen monetary policy to juice the economy and those who fear that such steps would raise the risk of inflation.
The latest FOMC minutes suggested that opponents of stimulus were weakening their opposition in light of the disappointing condition of the US economy, said Marc Pado, chief US market strategist for Cantor Fitzgerald.
“Those that dissented were more in favor of doing something than they’ve ever been,” said Pado. “They were dissenting about what to do but not that it is needed to be done. They stand ready to act and the market wants to see support.”
In the latest sign of US economic weakness, a survey by the Conference Board showed that consumer confidence plunged in August to its lowest level in more than two years.
In company news, Boeing shares gained 2.2 per cent after the aviation giant launched an upgraded version of its popular 737 airplane powered by a more fuel-efficient engine and reported strong demand from airlines.
Bank of America shares sank 3.2 per cent after a US government agency, the Federal Deposit Insurance Corporation, challenged its proposed $US8.5 billion settlement aimed at resolving claims from the subprime-mortgage debacle.
The bank, whose stock is down more than 16 percent over the past month, was also hit with a lawsuit over an $US1.75 billion pool of mortgages, many of which went into default the US housing price bubble collapsed.
Bond prices rose. The yield on the 10-year Treasury note dropped to 2.18 percent from 2.27 percent late Monday, while that on the 30-year bond fell to 3.51 percent from 3.62 percent. Bond prices and yields move in opposite directions.
