* Fed expected to try to soothe markets over stimulus
* Industrial and tech shares rally, 3M at 52-week high
* Boeing shares hit 5 1/2-year high
* Indexes up: Dow 0.9 pct, S&P 0.8 pct, Nasdaq 0.9 pct
By Ryan Vlastelica
NEW YORK, June 18 U.S. stocks advanced for a
second straight day on Tuesday as investors bet the Federal
Reserve would temper statements which were interpreted to mean a
sooner-than-expected winding down of stimulus efforts.
Strong market breadth showed an increased appetite for
equities, but trading volume was light, a sign that many market
participants were taking a wait-and-see attitude.
The Fed's two-day policy meeting started Tuesday, and
traders are trying to guess its timeline for scaling back
purchases of $85 billion per month of bonds. The policy, known
as quantitative easing, has helped fuel stocks' rally, taking
major indexes to record levels. The S&P is about 1 percent away
from its all-time closing high.
The Fed has said its goal is to target its benchmark
interest rate near zero to lower the unemployment rate to 6.5
percent as long as inflation stays below 2.5 percent.
A policy statement from the central bank will be released
Wednesday, and investors expect the current level of purchases
will be maintained despite strong recent data pointing to
improvements in the economy. Fed Chairman Ben Bernanke recently
said the program would be wound down when the economy is strong
enough, causing a surge of volatility in financial markets.
"Stocks are higher as investors adjust to the fact that not
only will the Fed not announce tapering tomorrow, but that the
economy is quite capable of growing without it," said David
Kelly, the chief global strategist for JPMorgan Funds in New
York, which has about $400 billion in assets under management.
"There are reasons to be cautious and uncertain, but the
market is still cheap and should continue to expand for a long
time," he said, adding that he was overweight on cyclical
groups, whose fortunes are especially tied to the pace of
The Dow Jones industrial average was up 138.38
points, or 0.91 percent, at 15,318.23. The Standard & Poor's 500
Index was up 12.76 points, or 0.78 percent, at 1,651.80.
The Nasdaq Composite Index was up 30.05 points, or 0.87
percent, at 3,482.18.
General Electric gained 2.4 percent to $24.33 and was
one of the most actively traded stock on the New York Stock
Exchange. Natural sources company Cliffs Natural Resources
jumped 5 percent to $18.59 as one of the biggest gainers
on the S&P. Micron Tech climbed 3.9 percent to $13.75,
helping to boost the Nasdaq.
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 1 percent
to $104.08, its highest since October 2007.
About two-thirds of companies traded on both the New York
Stock Exchange and Nasdaq rose, with both exchanges seeing more
than 150 securities hit 52-week highs, including 3M Co.
About 5.43 billion shares changed hands on the New York
Stock Exchange, the Nasdaq and NYSE MKT, below the daily average
so far this year of about 6.36 billion shares.
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 market has been volatile since 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 and the CBOE Volatility
index, a measure of investor anxiety, is up 31 percent so
far this quarter.
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.
Shares of Walter Energy Inc jumped 16.5 percent to
$13.63, rebounding after a two-day selloff triggered by news
that the company pulled a planned $1.55 billion credit
On the downside, Hormel Foods Corp fell 3.6 percent
to $39.20 after cutting its full-year profit view. It was the
biggest percentage decliner on the S&P.
After the market closed, Adobe Systems Inc rose 4.2
percent to $45.20 after reporting adjusted earnings that beat