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U.S. stocks off intraday highs amid housing data, Fed and BoJ caution

Published 09/20/2016, 11:38 AM
© Reuters.  Wall Street stocks cautiously higher after housing data with BoJ and Fed on tap

Investing.com – Wall Street traded slightly higher on Tuesday, though off intraday highs, as some worse-than-expected housing data dampened bullish sentiment and caution took hold ahead of major monetary policy decisions from the Federal Reserve (Fed) and Bank of Japan (BoJ).

At 11:31AM ET (15:31GMT), the Dow Jones gained 67 points, or 0.37%, while the S&P 500 advanced 6 points, or 0.30%, and the tech-heavy Nasdaq Composite traded up 14 points, or 0.26%.

On Thursday, August building permits unexpectedly declined and housing starts tumbled more than expected, causing some doldrums over the state of the U.S. housing market and the likes of the Atlanta Fed, Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) to notch down their economic growth expectations for the third quarter.

As Wall Street reached midday trade, caution seemed to reign in earlier gains (the Dow traded up more than 100 points in early morning trade) as the final countdown to key monetary policy decisions moved closer to the mark.

The Japanese central bank will be first up to bat and is widely expected to embark on more policy easing when it releases its rate decision and monetary policy statement ahead of the Fed’s own decision, though economists were split on exactly what the next move would be.

Among the options being considered were a possible interest rate cut deeper into negative territory, tweaks to its asset-purchase program or new rules on the duration of securities it will purchase in the bond market.

The BoJ decision will come in while most U.S. investors are in bed, but is expected to move markets on Wednesday ahead of the Fed’s own announcement with the session well underway.

The Fed is not expected to make a move on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (18:00GMT) on Wednesday, but investors will first focus on the statement and updated forecasts for economic growth and interest rates that will be released simultaneously with the rate decision for a first gauge on when the central bank contemplates returning to policy normalization.

Fed chair Janet Yellen will then hold what will be a closely-watched press conference 30 minutes after the release as investors look for any change in tone about the economy or future rate hikes.

Markets are currently pricing in just a 15% chance of a rate hike this week, according to Investing.com's Fed Rate Monitor Tool. For December, odds stood at 55.5%.

At the same time, both the dollar and gold were trading flat on Tuesday in a holding pattern ahead of the decision.

In active movers, Tobira Therapeutics Inc (NASDAQ:TBRA) skyrocketed more than 700% as Allergan offered around $1.7 billion, or five times its prior closing price, to purchase the company and gain access to experimental therapies on liver disease.

Lennar (NYSE:LEN) was down almost 3% after the disappointing housing data, despite the fact that second-largest U.S. homebuilder also reported quarterly earnings that beat on both the top and bottom line.

FedEx (NYSE:FDX), KB Home (NYSE:KBH) and Adobe Systems Incorporated (NASDAQ:ADBE) were among companies slated to report earnings after the close on Wednesday.

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