NEW YORK – Investors waded back into the market Tuesday, sending stocks moderately higher ahead of a fresh round of readings on the service sector, factory orders and pending home sales.
Wall Street expects the data to show more deterioration, but investors are hoping the pace of the declines will be more temperate. The market is eager for signs that the U.S. recession will end this year.
The Institute for Supply Management's December index of non-manufacturing activity is due at 10 a.m. Eastern time, as are the Commerce Department's report on November factory orders and the National Association of Realtors' November index of pending sales of existing homes.
The ISM data on the service sector should be particularly telling, said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. That said, he added, "there are a lot of money flows at this time of year. The markets often look beyond and ignore fundamental news."
Later on Tuesday, investors will be focusing on minutes from the Federal Reserve's December meeting. At that gathering, policymakers slashed the key interest rate to a record-low range of zero to 0.25 percent to encourage lending and borrowing. The central bank, which has begun buying mortgage-backed securities, also said at the time it was considering buying other types of securities, too, such as Treasurys.
"We're all wondering about Federal Reserve policy," Johnson said. "The question is, is there any more that the Federal Reserve can do? Are there any more arrows in their quiver? You might get a clearer answer on that from the minutes; they might discuss all the options available to the Federal Reserve."
In the first half hour of trading, the Dow Jones industrial average rose 64.44, or 0.72 percent, to 9.017.33. The Standard & Poor's 500 index rose 9.09, or 0.98 percent, to 936.54, while the Nasdaq composite index gained 14.84, or 0.91 percent, to 1,642.87.
The Dow had fallen 81 points on Monday, giving back some gains from last week's rally. Investors were encouraged, though, about President-elect Barack Obama's calls for an economic stimulus package. Last week, all the major indexes gained more than six percent.
Bond prices retreated early Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.56 percent from 2.48 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.14 percent from 0.09 percent.
The dollar rose against the euro and the British pound, but fell against the Japanese yen. Gold prices fell.
Light, sweet crude for February delivery advanced $1.24 to $50.05 a barrel on the New York Mercantile Exchange.
In Asian trading, Japan's Nikkei stock average rose 0.42 percent, and Hong Kong's Hang Seng index dipped 0.35 percent. In afternoon trading in Europe, Britain's FTSE 100 rose 1.33 percent, Germany's DAX index rose 1.64 percent, and France's CAC-40 rose 1.33 percent.