News with Tags "economy"

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New York strikes deal to allow Las Vegas-style casinos

Posted on Thursday, June 20, 2013 - 01:01 am

By Francesca Trianni

NEW YORK (Reuters) - New York Governor Andrew Cuomo struck a deal with state lawmakers to license new resort-style casinos, in an effort to help revive a stagnant economy in upstate New York, the governor said on Wednesday.

The agreement would amend the state constitution to legalize public, non Native American casino gambling with an initial four Las-Vegas style casinos in the Hudson Valley, the Binghamton area and the Albany region.

Until now, New York has allowed table gambling only on Native American tribal land or slot machine gambling at horse racing tracks.

"Today's agreement with the legislature would establish world-class destination gaming resorts to attract tourists to upstate New York," Cuomo said in a statement.

"This legislation is a major step forward in our efforts to both capitalize on this economic development and tourism potential and end the trend of letting neighboring states with legalized gaming take revenue that should be going to our schools."

New casinos in New York state with table games could provide competition to New Jersey's Atlantic City, Pennsylvania and Connecticut, as New Yorkers who now frequent those venues might prefer to gamble closer to home.

But U.S. casinos operators like MGM Resorts International and Caesars Entertainment Corp plan to launch Internet operations in states like New Jersey, which recently passed online gambling legislation.

A vote on the New York deal was expected on Friday, before the state legislative session ends. New York can only legalize casinos if two successively elected legislatures enact bills, meaning the legislature would take to approve the measure again next session.

Voters would then have to approve a constitutional amendment legalizing casino gambling.

In addition to the first four casinos, the bill also includes a proposal for a video slot machine center with about 2,000 machines in the Long Island area, said Rich Azzopardi, a spokesperson for Governor Cuomo's office.

Seven years after those licenses are sold, another round of casino licensing would be allowed for three casinos, that could be built also in the New York City area, Azzopardi said.

In January of last year, Cuomo vowed to boost the New York economy during his second annual State of the State address with initiatives that included the construction of Las Vegas-style casinos to increase tourism and allow property tax relief for upstate New York's struggling cities.

A recently released federal report showed New York state's economy grew at a slower pace than the national rate in 2012. New York's unemployment rate was 7.8 percent in April, above the national average of 7.5 percent.

New York state's nine racetrack casinos employed about 5,000 people and generated about $1.8 billion in gross gaming revenue 2012 and turned over $823 million in taxes to the state, according to data from the American Gaming Association (AGA).

Gambling opponents say casinos use deceptive tactics to lure addicts, arguing casinos should be held accountable for billions of dollars in costs to society. The National Council on Problem Gambling estimates that gambling addictions account for $7 billion a year in health care and criminal justice system costs.

(Reporting by Francesca Trianni; Editing by Daniel Trotta and Sofina Mirza-Reid)

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Posted by on Thursday, June 20, 2013 - 01:01 am.
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Fed suggests it’s closer to slowing bond purchases

Posted on Thursday, June 20, 2013 - 01:00 am

WASHINGTON (AP) — Chairman Ben Bernanke ended weeks of speculation Wednesday by saying the Federal Reserve will likely slow its bond-buying program later this year and end it next year if the economy continues to improve.

The Fed's bond purchases have helped keep long-term interest rates at record lows.

Bernanke said the reductions would occur in "measured steps" and that the purchases could end by the middle of next year. By then, he said he thought unemployment would be around 7 percent.

Bernanke likened any reduction in the Fed's $85 billion-a month in bond purchases to a driver letting up on a gas pedal rather than applying the brakes.

Anticipating higher interest rates, investors reacted by selling both stocks and bonds. The Dow Jones industrial average was down 167 points in late-afternoon trading after Bernanke's news conference ended. The yield on the 10-year Treasury note shot up to 2.31 percent from 2.21 percent just before the statement came out.

The Fed sketched a brighter economic outlook Wednesday, which is why it thinks record-low interest rates may soon no longer be necessary. Low rates help fuel economic growth. But they also raise the risk of high inflation and dangerous bubbles in assets like stocks or real estate.

Speaking of the economy, Bernanke said, "The fundamentals look a little better to us."

He spoke at a news conference after the Fed ended a two-day policy meeting. After the meeting, the Fed voted to continue the pace of its bond-buying program for now. But it offered a more optimistic outlook for the U.S. economy and job market.

In its statement, the Fed said the economy is growing moderately. And for the first time it said the "downside risks to the outlook" had diminished since fall.

Timothy Duy, a University of Oregon economist who tracks the Fed, called the statement "an open door for scaling back asset purchases as early as September."

The fact that the Fed foresees less downside risk to the job market "gives them a reason to pull back" on its bond purchases, Duy said.

The Fed said it will keep buying $85 billion a month in bonds until the outlook for the job market improves substantially. The goal is to lower long-term interest rates to encourage borrowing, spending and investing. It hasn't defined substantially.

Asked if it will be difficult for the Fed to clearly communicate its plans for scaling back the bond purchases, Bernanke agreed.

"We are in a more complex type of situation," he said. "We are going to be as clear as we can."

In its statement Wednesday, the Fed said it would maintain its plan to keep short-term rates at record lows at least until unemployment reaches 6.5 percent.

The Fed also released its latest economic projections Wednesday. Fed officials predicted that unemployment will fall a little faster this year, to 7.2 percent or 7.3 percent at the end of 2013 from 7.6 percent now. They think the rate will be between 6.5 percent and 6.8 percent by the end of 2014, better than its previous projection of 6.7 percent to 7 percent.

The Fed also said inflation was running below its 2 percent long-run objective, but noted that temporary factors were partly the reason. It said inflation could run as low as 0.8 percent this year. But it predicts it will pick up next year to between 1.4 percent and 2 percent.

"The more upbeat tone and the change in the unemployment forecast will only encourage expectations for action soon," Jim O'Sullivan, chief U.S. economist at High Frequency Economics, wrote in a research note. "We continue to believe that tapering could start at the Sept. 17-18 meeting."

But David Robin, co-head of the futures and options desk at the brokerage Newedge, said he didn't think Bernanke's upbeat assessment matches an economy that's just "muddling along."

Investors may suspect the Fed is looking for a reason to scale back the bond purchases, Robin said. "It's a big mess," he said.

The statement was approved on a 10-2 vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, objected for the first time this year, saying he wanted a stronger commitment from the Fed to keep inflation from falling too low.

Esther George objected for the fourth time this year, again voicing concerns about inflation rising too quickly.

During his news conference, Bernanke declined to address speculation that he will step down as Fed chairman when his term ends in January.

He was asked to respond to comments Monday by President Barack Obama, who said Bernanke had already stayed longer than planned. The president's remarks added to expectations that Bernanke intends to step down.

Bernanke avoided the question.

"I would like to keep the discussion on monetary policy," he said. "I don't have anything for you on my personal plans."

The ultra-low rates engineered by the Fed have helped fuel a housing comeback, support economic growth, drive stocks to record highs and restore the wealth America lost to the recession.

Financial markets have been gyrating in the four weeks since Chairman Ben Bernanke told Congress the Fed might scale back its effort to keep long-term rates at record lows within "the next few meetings"— earlier than many had assumed.

Bernanke cautioned that the Fed would slow its support only if it felt confident the job market would show sustained improvement. And he also told lawmakers that the Fed must take care not to prematurely reduce its stimulus for the still-subpar economy.

The Fed announced after its September meeting that it would purchase $40 billion a month in mortgage bonds for as long as it deems necessary. And in December, the Fed expanded the program to $85 billion a month, adding $45 billion a month in Treasury bond purchases. The Treasury purchases replaced an expiring bond-purchase program.

Job growth picked up after the Fed announced the latest round of bond purchases. Since October, the economy has added an average of 196,500 jobs a month, up from 157,000 a month in the previous eight months.

Last month, the U.S. economy added a solid 175,000 jobs. But the unemployment rate is still high at 7.6 percent. Economists tend to regard the job market as healthy when unemployment is between 5 percent and 6 percent.

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Posted by on Thursday, June 20, 2013 - 01:00 am.
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The Fed: Fed much more upbeat about outlook

Posted on Thursday, June 20, 2013 - 00:27 am

By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve on Wednesday signaled greater optimism about the economy, forecasting that the unemployment rate could fall to 6.5% by 2014, one year sooner than the central bank had previously estimated.

The more upbeat forecast threw financial markets in a tizzy, as investors focused on growing prospects that the Fed could begin to scale back a massive bond-buying program meant to boost the economy. The purchases have helped prop up stock prices and keep U.S. interest rates ultra-low.

In a press conference after the Fed’s latest meeting, Chairman Ben Bernanke suggested the bank could slowly start to taper its assets purchases by year end if the economy meets the Fed’s targets.

The Fed’s newly revised forecast and Bernanke’s comments slammed U.S. financial markets. Losses in the stock market deepened and Treasury prices declined.

Yet Bernanke also stressed that the bank will not immediately start to scale back its asset-purchase program once its economic targets are met. He said the bank has to be convinced that the economic recovery is on solid upward path before it starts to pull back.

“Our policy is in no way predetermined,” Bernanke said. “Our policies are tied to what’s going on in the economy.”

The Fed has repeatedly said it would keep interest rates close to zero so long as the jobless rate, now at 7.6%, was above its 6.5% threshold.

The bank probably won’t raise rates until well after it begins to taper its bond-purchase strategy. Indeed, 14 of the 15 Fed members don’t expect the first rate hike until 2015, according to the bank statement

Upbeat outlook

The Fed released its regular policy statement shortly before Bernanke’s news conference and the bank’s outlook showed subtle but important changes. The Fed said downside risks to the outlook have “diminished since the fall” and that the labor market had shown further improvement.

The Fed didn’t seem worried about inflation even though the bank forecast that the slowdown in inflation this year would be temporary. Fed officials trimmed their inflation forecast for 2013, as expected, but kept estimates for 2014 and 2015 steady at close to 2%.

In the statement, the Fed said inflation was low due to “transitory influences.”

The Fed also said economic growth could top 3% in 2014 and 2015.

While the Fed plans to continue to buy $85 billion in Treasurys and mortgage-backed bonds each month, the bank’s optimistic forecast might give it confidence to begin to downsize its purchases.

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Posted by on Thursday, June 20, 2013 - 00:27 am.
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US futures waver in light trading

Posted on Wednesday, June 19, 2013 - 17:10 pm

NEW YORK (AP) — U.S. stock futures are mixed in light trading with investors holding back before the Federal Reserve reveals its stance on the economy.

Markets have swung wildly for weeks leading up to the two-day meeting, which ends Wednesday.

Dow Jones industrial futures are down 14 points to 15,230. The broader S&P futures have fallen less than a point to 1,644.40. Nasdaq futures are up 2.75 points to 2,991.25.

Economic indicators are painting an image of an economy on the mend, though still fragile.

It's been uncertainty about how the Fed reads those signals, and whether it will maintain its aggressive economic stimulus efforts.

If the answer is no, the question then becomes how fast it will dismantle a massive bond-buying program that has kept markets flush with cash, and interest rates low.

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Posted by on Wednesday, June 19, 2013 - 17:10 pm.
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India hurting US jobs, economy: American biz group

Posted on Wednesday, June 19, 2013 - 08:33 am
A group of major American business organisations and advocacy groups today launched a new alliance against what they allege as India's "discriminatory" economic policies, including intellectual property issues, which they claim hurt US jobs and economy.

Co-chaired by the National Association of Manufacturers (NAM) and the US Chamber of Commerce's Global Intellectual Property Centre (GIPC), the Alliance for Fair Trade with India (AFTI) was launched in Washington ahead of the India visit of the US Secretary of State John Kerry, for the fourth India-US Strategic Dialogue.


"India's unfair trade practices against US manufactured exports is putting jobs at risk and harming American manufacturing workers," said NAM vice president for International Economic Affairs Linda Dempsey.


"The Obama administration must engage the Indian government in high-level discussions to put an end to these practices to protect manufacturers' competitiveness and jobs," Dempsey said.


"In recent months, India has systematically failed to respect global intellectual property standards, causing an impact to its investment potential," alleged Mark Elliot, executive vice president of the GIPC.


"From unprecedented patent revocations and denials to insufficient copyright enforcement, India has established itself as an outlier in the global economy. If this is truly to be India's 'Decade of Innovation', the government must promote robust IP policies that incubate both homegrown and international innovators," Elliot said.


The alliance alleged that over the last year, India has systematically discriminated against a wide range of innovative US products and exports in order to benefit India's business and industrial community at the expense of American jobs.


These actions constitute a disturbing trend that puts at risk a growing bilateral trade relationship worth over USD 60 billion in 2012 alone, it said. In a cross-sector report comparing IP systems across the globe, 'Measuring Momentum', the GIPC found that India consistently ranked last, behind Brazil, China and Russia in promotion and enforcement of patents, copyrights, and trademarks.


Earlier this month, in a letter sent to President Obama, 17 business groups had urged the US government to end discrimination against innovative products and manufacturing exports and restore American jobs currently being lost to India's "unfair trade policies".


"It is time the Government of India ended discrimination against our nation's exporters and took steps to ensure it is not repeated in the future," the letter noted.


In the coming weeks, AFTI will work with the administration and members of Congress to pursue public policy options that help create a level playing field for US exporters operating in India.


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Posted by on Wednesday, June 19, 2013 - 08:33 am.
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Senate immigration bill to aid economy, budget office says

Posted on Wednesday, June 19, 2013 - 05:13 am

By Thomas Ferraro and Richard Cowan

WASHINGTON (Reuters) - A White House-backed bill to overhaul the U.S. immigration system got a boost on Tuesday when the non-partisan Congressional Budget Office concluded that the measure would cut federal budget deficits and boost the U.S. economy.

The CBO analysis came as the Senate fended off amendments by the bill's opponents that would have delayed for an unspecified amount of time provisions to legalize up to 11 million undocumented immigrants and allow them to gain citizenship within 13 years.

But House of Representatives Speaker John Boehner raised new doubts about the bill's prospect in his chamber, where many Republicans oppose the "pathway to citizenship" for illegal immigrants that President Barack Obama and his fellow Democrats have made a central feature of the sweeping measure.

The bill could pass the Democratic-led Senate by the end of this month.

According to the CBO, which assesses the cost and economic impact of legislation pending in Congress, the Senate bill would "boost economic output" and significantly reduce federal budget deficits over the next 20 years.

The White House embraced the CBO analysis, which was a rare bit of upbeat news after recent scandals over Internal Revenue Service handling of conservative groups' requests for tax-exempt status and disclosures of widespread government surveillance of telephone and Internet records.

"The Congressional Budget Office ... made clear that passage of the immigration bill would not only reduce the deficit, it would increase economic growth for years to come," White House Press Secretary Jay Carney said in a statement.

One outspoken critic of the Senate immigration bill, Republican Senator Jeff Sessions of Alabama, attacked the CBO findings, however, saying they failed to take into account longer-term costs related to the 11 million becoming legal residents and eventually qualifying for "Medicaid, food stamps and cash welfare."

BOEHNER SURPRISE

Boehner made a surprise announcement on Tuesday when he told reporters he would only allow consideration of immigration bills backed by most of the 234 Republicans in the 435-member chamber.

"I don't see any way of bringing an immigration bill to the floor that doesn't have a majority support of Republicans," Boehner said after a closed-door meeting with his caucus.

Previously, Boehner had only said he would await Senate passage of a bill before deciding what course the House would take on an issue at the top of Obama's legislative agenda this year.

Many Democrats had hoped Boehner would advance a bill like the Senate's - one containing the pathway to citizenship - and that it could pass the House with the combined backing of most of the 201 House Democrats and some Republicans.

But the House Judiciary Committee worked on Tuesday not on pathways to citizenship for illegal immigrants but on a Republican proposal to clamp down on them.

It would do so by allowing state and local law enforcement officers to get involved in immigration enforcement, an activity now conducted by federal agents. It would also let states and localities enact and enforce their own immigration laws, as long as they were consistent with federal laws.

"We can't just be fixated on securing the (Southwestern) border," Judiciary Committee Chairman Bob Goodlatte said. He added that the Republican-backed bill would strengthen federal enforcement of immigration laws while ensuring "that where the federal government fails to act, states can pick up the slack."

Representative John Conyers, the senior Democrat on the committee, called the bill "extreme and heinous." He likened it to an Arizona state law he said had resulted in "widespread racial profiling and unconstitutional arrests."

Some Democrats said they were hopeful Boehner would back off his new requirement that any immigration bill be supported by a majority of House Republicans, just as he did in the past year on such issues as tax hikes on the wealthy, the U.S. debt limit, disaster relief and renewal of a landmark bill to curb domestic violence against women.

"Boehner is trying to maximize his leverage so he can get a bill that is as conservative as possible," one Democratic aide said.

SPLIT ON BORDER SECURITY

In the Senate, a split over how to strengthen border security has slowed action on the measure sponsored by a bipartisan "Gang of Eight."

Many Senate Republicans do not believe the bill's provisions to tighten security along the border with Mexico go far enough.

Senator John Hoeven of North Dakota said he and some fellow Republicans were making progress on a compromise amendment that could be unveiled as early as Wednesday to deal with border security.

Boehner echoed complaints by many Republicans about the Senate bill, saying he believed the measure "is weak on border security."

Once the Senate passes its bipartisan bill, there may be pressure on Boehner to bring it or a similar measure up for a vote in his chamber, even if most House Republicans oppose it.

"The political winds will be much different after the Senate passes its bill," the Democratic aide said, especially if there is an overwhelming bipartisan tally.

The Republican Party urged its members to embrace comprehensive immigration reform after last year's election, which saw 71 percent of Hispanics, members of the fast-growing voting bloc, support Obama's re-election.

(Additional reporting by David Lawder and Rachelle Younglai; Editing by Peter Cooney)

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Posted by on Wednesday, June 19, 2013 - 05:13 am.
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Senate immigration bill would boost economy, CBO says

Posted on Wednesday, June 19, 2013 - 02:25 am

Rick Perry, the Texas governor and 2012 "oops" presidential candidate, is spending the beginning of this week in Connecticut. Perry, as the governor of Texas, has little on-its-face reason to be in Connecticut. Except, of course, for one: Texas's unemployment rate, which at 6.4 percent in April is significantly lower than the national average, is still not quite ideal. Perry wants to bring jobs to his state. And, as he sees it, some of those jobs could come from Connecticut.

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Posted by on Wednesday, June 19, 2013 - 02:25 am.
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Inflation data points to firming economy

Posted on Tuesday, June 18, 2013 - 22:02 pm

By Jason Lange

WASHINGTON | Tue Jun 18, 2013 1:02pm EDT

WASHINGTON (Reuters) - Inflation showed signs of stabilizing in May after a long decline, a potential comfort to Federal Reserve policymakers who want to avoid any chance of a debilitating bout of deflation.

The Labor Department said on Tuesday the consumer price index edged 0.1 percent higher last month after two straight months of declines, while the so-called core index, which excludes food and energy costs, rose 0.2 percent, just above the pace clocked in April.

The core index, which the U.S. central bank monitors closely because it is less volatile and provides a better sense of price trends, was up 1.7 percent in the 12 months through May.

The increase matched the gain in April and suggested that a worrisome downward trend in core inflation, which began a year ago, might be coming to an end as consumer demand strengthens.

That would be a relief to Fed officials who worry that a big drop in inflation could lead to a spiral of falling prices and wages. Removing this risk could make the Fed more comfortable with eventually paring back its bond-buying stimulus.

"Inflation pressures remain very subdued, but downside momentum is fading," said Eric Green, an interest rate strategist at TD Securities in New York.

The central bank began a two-day meeting on Tuesday and is expected to leave a bond-buying stimulus program unchanged.

While May's reading for 12-month core inflation remains below the Fed's 2 percent inflation target, a stabilization could make the Fed more comfortable paring back its economic stimulus programs as soon as this fall.

The overall CPI was up 1.4 percent from a year-ago in May, up three-tenths of a percentage point from the prior month.

"The economy has been performing decently," said Carl Riccadonna, an economist at Deutsche Bank in New York. "I don't think the Fed is concerned" with weak inflation data.

In May, the core price index rose with support from a 0.2 percent increase in clothing prices and a strong 0.3 percent increase in shelter costs.

Yields rose a bit on U.S. government debt and U.S. stock prices were higher at midday.

The Fed is widely seen to be moving closer to cutting back on its extraordinary support for the U.S. economy, which has shown signs of resilience despite tax hikes and government spending cuts this year. It has been buying $85 billion in bonds each month to lower borrowing costs and spur hiring.

A separate report showed U.S. housing starts rose less than expected in May, likely reflecting labor and material constraints. Still, the overall trend remained consistent with a housing market recovery that will help counter the drag on the economy from government austerity.

Housing starts rose 6.8 percent to a seasonally adjusted annual rate of 914,000 units. April's starts were revised up to show a 856,000-unit pace instead of the previously reported 853,000 units.

"What we see is a housing market that will continue to improve this year into 2014," said Gus Faucher, a senior macroeconomist at PNC Financial Services in Pittsburgh.

(Reporting by Jason Lange; Additional reporting by Lucia Mutikani and Paige Gance in Washington and by Karen Brettell and Richard Leong in New York; Editing by Neil Stempleman)

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Posted by on Tuesday, June 18, 2013 - 22:02 pm.
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Stocks move higher on home building, low inflation

Posted on Tuesday, June 18, 2013 - 21:25 pm

NEW YORK (AP) — U.S. stocks were up at midday Tuesday, boosted by government reports of gains in home construction and low inflation. Expectations that the Federal Reserve will keep in place programs meant to prop up the economy also drove the market higher.

The Dow Jones industrial average was up 110 points, or 0.7 percent, to 15,289 shortly after noon.

The Standard & Poor's 500 index edged up nine points, or 0.6 percent, to 1,648. All 10 industry groups in the index were higher, led by telecommunications.

The Commerce Department said that the pace of new home building was up in May, helped by more buyers coming to the market and a scarcity of houses for sale.

The Fed has had an outsized effect on the stock market in recent weeks, with major indexes getting yanked back and forth after Fed Chairman Ben Bernanke said May 22 that the central bank could pull back on its bond-buying program, which is meant to help the economy by driving investors into stocks and keeping interest rates low. Fed policymakers began meeting Tuesday, but it won't be until Wednesday that they announce their latest decisions.

For many investors, Tuesday was just a holding pattern ahead of Wednesday's Fed news.

"The big wind blowing is what's coming from the Fed meeting, and right now the wind is not blowing," said Brian Doe, wealth adviser at Gratus Capital in Atlanta. "We have this little calm where everybody can be optimistic."

Despite the Tuesday report showing a pickup in home building, many analysts think Fed leaders will determine that the economy is still weak enough to need the Fed's stimulus, which has generally made them send stocks higher. That's largely because the government's jobs report earlier this month showed that, while the U.S., economy is still adding jobs, it's not at a rate fast enough to bring down the unemployment level.

The Labor Department reported Tuesday that U.S. consumer prices rose in May, but only slightly. That's also likely to weigh in on the Fed's decision making: The Fed knows that its stimulus programs can lead to inflation. If inflation is in check, that gives the Fed more leeway to continue the programs.

Stocks were up throughout most of Europe, despite reminders that the economy there is still far from healed. European car sales hit their lowest level for the month of May in 20 years. In Greece, bickering continued over the prime minister's decision last week to shut down state TV in an effort to save money.

In other U.S. stock trading, the Nasdaq composite index rose 22 points, or 0.6 percent, to 3,474.

Among stocks making big moves:

—Hormel Foods, the maker of Spam and Skippy peanut butter, slipped after the company said it expects lower profits for the year. The stock fell $1.73, or 4.2 percent, to $38.92.

—Jack in the Box was up after announcing it will close about 20 percent of the Qdoba Mexican Grill restaurants that it owns. Jack in the Box rose 97 cents, or 2.6 percent, to $37.96.

—Signet Jewelers, which runs the Kay Jewelers and Jared brands, rose after announcing that it plans to buy back up to $350 million of its own stock. Signet rose $1.05, or 1.5 percent, to $69.02.

—Newfield Exploration was up after a Stifel Nicolaus analyst boosted the stock to "Buy" from "Hold." Shares of the oil and natural gas company rose 79 cents, or 3.4 percent, to $23.80.

—Sprint and Dish Network were both up after Sprint sued Dish Network to try to stop its purchase of wireless data network provider Clearwire. Sprint Nextel was up 10 cents, or 1.4 percent, to $7.32. Dish Network was up 48 cents, or 1.2 percent, to $39.31.

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Posted by on Tuesday, June 18, 2013 - 21:25 pm.
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Stocks edge higher on home building, low inflation

Posted on Tuesday, June 18, 2013 - 19:33 pm

NEW YORK (AP) — U.S. stocks were up in early trading Tuesday, boosted by government reports of gains in home construction and low inflation. Expectations that the Federal Reserve will keep in place programs meant to prop up the economy also drove the market higher.

The Dow Jones industrial average was up 75 points, or 0.5 percent, to 15,253 after the first hour of trading.

The Standard & Poor's 500 index edged up five points, or 0.3 percent, to 1,644. All 10 industry groups in the index rose, led by telecommunications.

The Commerce Department said that the pace of new home building was up in May, helped by more buyers and a scarcity of houses for sale.

The Fed has had an outsized effect on the stock market in recent weeks, with major indexes getting yanked back and forth after Fed Chairman Ben Bernanke said May 22 that the central bank could pull back on its bond-buying program, which is meant to help the economy by driving investors into stocks and keeping interest rates low. Fed policymakers began meeting Tuesday, but it won't be until Wednesday that they announce their latest policy decisions.

For many investors, Tuesday was just a holding pattern ahead of Wednesday's Fed news.

"The big wind blowing is what's coming from the Fed meeting, and right now the wind is not blowing," said Brian Doe, wealth adviser at Gratus Capital in Atlanta. "We have this little calm where everybody can be optimistic."

Despite Tuesday's report on a pickup in home building, many analysts think Fed leaders will determine that the economy is still weak enough to need Fed stimulus, which has generally made them send stocks higher. That's largely because the government's jobs report earlier this month showed that, while the U.S., economy is still adding jobs, it's not at a rate fast enough to bring down the unemployment level.

The Labor Department reported Tuesday that U.S. consumer prices rose in May, but only slightly. That's also likely to weigh in on the Fed's decision making: The Fed knows that its stimulus programs can boost inflation. If inflation is in check, that gives the Fed more leeway to continue the programs.

Stocks were up throughout most of Europe, despite reminders that the economy there is still far from healed. European car sales hit their lowest level for the month of May in 20 years. In Greece, bickering continued over the prime minister's decision last week to shut down state TV in an effort to try to save money.

In other U.S. stock trading, the Nasdaq composite index rose 15 points, or 0.4 percent, to 3,467.

Among stocks making big moves:

—Hormel Foods, the maker of Spam and Skippy peanut butter, slipped after the company said it expects lower profits for the year. The stock fell $2.01, or 5 percent, to $38.63.

—Jack in the Box was up after announcing it will close about 20 percent of the Qdoba Mexican Grill restaurants that it owns. Jack in the Box rose 97 cents, or 2.6 percent, to $37.96.

—Signet Jewelers, which runs the Kay Jewelers and Jared brands, rose after announcing that it plans to buy back up to $350 million of its own stock. Signet rose $1.05, or 1.5 percent, to $69.02.

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Posted by on Tuesday, June 18, 2013 - 19:33 pm.
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