By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks wobbled initially but
rebounded by Tuesday afternoon as investors shrugged off concerns
over sectarian conflict in Iraq and mildly disappointing government
data on inflation and housing.
Consumer prices rose sharply in May, while a number of housing
starts declined by more than expected. Meanwhile in Iraq,
government forces fought with militant rebels, killing 28 ISIS
fighters, according to the Wall Street Journal report.
The S&P 500 (SPX) was 5 points, or 0.3%, higher at 1,942.66.
The Dow Jones Industrial Average (DJI) added 30 points, or 0.2%, to
16,812.85.
The Nasdaq Composite (RIXF) added 22 points or 0.5%, to
4,342.60. The Russell 2000 (RUT) index of small stocks rallied,
adding 11 points, or 0.9%, to 1,178,18, outperforming other
benchmarks.
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action.
Liz Ann Sonders, chief investment strategist at Charles Schwab
said that even with the tick-up in the inflation rate, it remains
below the Fed's target.
"Today's CPI data was slightly higher than expected and did not
come to us as a big surprise, but certainly the uptick sparked
fears of a possible risk of inflation," Sonder said.
"On the housing starts, while the headline number was
disappointing, the less noisy year-over-year trend is still
improving. There are more housing starts this year then there were
last year and that's a positive," she added.
In economic news, U.S. consumer prices rose sharply in May for
the second straight month, prompting fears that the Federal Reserve
may begin tightening the monetary policy sooner than the markets
are expecting.
Construction on new U.S. homes fell by 6.5% in May and builders
trimmed plans for future projects in another sign that a hoped-for
spring revival in the housing market remains elusive.
Officials at the Federal Open Markets Committee began their
two-day policy-setting meeting.
Read: What brokerages are saying about the FOMC meeting on
Wednesday.
In corporate news, Nuance Communications Inc. (SSFT) shares
climbed 2.2% after reports on Monday that the speech-recognition
software maker had held talks with suitors, including Samsung
Electronics Co. and private equity funds. Nuance shares are up over
27% this year so far.
Tesla Motors Inc. (TSLA) shares rose 4.5% building on an 8.8%
gain in the previous session over reports about a possible
collaboration with its competitors. Tesla shares have climbed 53%
year to date.
Shares of Gentiva Health Services Inc. (GTIV) rallied 4.1% after
Kindred Healthcare Inc. (KND) sweetened its bid for the home-health
and hospice company.
Shares in E-Trade Financial Corp (ETFCD) and Charles Schwab Corp
(SCHW) rallied 6.5% and 5.4% respectively with the Senate hearing
on whether high-frequency trading hurts the markets.
European stocks rebounded and were set to close with modest
gains. Asian stock were mostly lower, but the Nikkei bucked the
trend and finished higher.
Gold for August delivery (GCQ4) fell over $10, along with oil
prices. The pound fell against the dollar (GBPUSD) after annual
inflation in the U.K. slowed to its lowest rate in almost five
years, easing pressure on the Bank of England to hike rates. Oil
futures were largely unchanged.
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