* Fed expected to dial back rhetoric on reducing stimulus
* Boeing shares hit new 5 1/2-year high
* Indexes up: Dow 0.8 pct, S&P 0.7 pct, Nasdaq 0.8 pct
By Alison Griswold
NEW YORK, June 18 U.S. stocks climbed on
Tuesday, led by growth-oriented sectors, as investors took an
optimistic view that the Federal Reserve will temper recent
statements pointing to the future reduction of U.S. monetary
Shares of industrial, technology and consumer discretionary
companies rallied on expectations that the Fed will maintain its
current level of bond purchases when it issues its policy
statement Wednesday. General Electric gained 1.9 percent
to $24.21 and was the fourth most actively traded stock on the
New York Stock Exchange.
The Fed's two-day meeting started Tuesday, and traders are
trying to anticipate the Fed's timeline for winding down
purchases of $85 billion per month of bonds, known as
quantitative easing, that have underpinned the S&P 500's rally
to all-time highs in May.
The expectation is that the Fed will dial back its rhetoric
on tapering to ease "hysteria" in the markets since talk of
reducing stimulus heated up in May, said Peter Kenny, chief
market strategist at Knight Capital in Jersey City, New Jersey.
However, the growing belief that the Fed will not throttle
back its stimulus may be positioning the market for a selloff
tomorrow, with people already betting against any "bad" news
from the central bank, said Uri Landesman, president of Platinum
Partners in New York.
"Odds are the news isn't as good as what people are
expecting," he said.
The market has been volatile since Fed Chairman Ben Bernanke
said on May 22 the Fed could begin to trim its stimulus in the
"next few meetings" if the economy gains momentum and inflation
remains moderate. Intraday swings have widened, although the S&P
500 closed on Monday less than 1 percent below the May 22 close.
Consumer prices rose slightly last month, the government
said on Tuesday, giving the deflation-wary Fed some respite. The
consumer price index, excluding food and energy, advanced 1.7
percent in the 12 months since May, indicating inflation
pressures remain subdued.
The S&P 500 is forecast to end 2013 at 1,700, according to
the median forecast from 42 analysts surveyed by Reuters in the
past week. That 19 percent gain for 2013 would mark the best
year since 2009.
The Dow Jones industrial average rose 126.14 points
or 0.83 percent, to 15,305.99, the S&P 500 gained 11.37
points or 0.69 percent, to 1,650.41 and the Nasdaq Composite
added 28.68 points or 0.83 percent, to 3,480.81.
Boeing launched a larger version of its flagship
Dreamliner aircraft at the Paris Airshow on Tuesday, sharpening
the battle with rival Airbus in the market for
fuel-efficient, long-distance jets. Boeing shares rose 0.7
percent to $103.80, a 5 1/2-year high.
Shares of Walter Energy Inc partly rebounded to
$13.65 after a two-day selloff triggered by news that the
company pulled a planned $1.55 billion credit refinancing.