Shares on Wall Street followed European indexes higher on Tuesday as traders awaited the results of midterm elections and the Federal Reserve’s two-day meeting amid speculation over stimulus programs. þþOil prices rose above $83 a barrel as stronger manufacturing in the world’s two biggest economies — the United States and China — bolstered optimism that demand for crude will improve. þþIn currencies, the Australian dollar jumped more than one American cent to briefly trade above $1 after the central bank raised its key interest rate. Policy makers are aiming to ward off higher inflation as Australia’s economy booms amid strong Asian demand for iron ore and other minerals. þþInvestors and businesses are mainly turning their attention to Tuesday’s midterm elections, which are expected to result in a Congress at least partially controlled by Republicans pitted against the Democratic administration of President Obama. Fights over taxes, deficits, health care and financial regulation could result in paralyzing uncertainty in the United States. þþInvestors also were anticipating a Fed announcement of a new program of buying Treasury bonds as early as Wednesday in a bid to stimulate the flagging American economy. þþIn early trading, the Dow Jones industrial average rose 79.09 points, or 0.7 percent. The broader Standard & Poor’s 500-stock index rose 8.14 points, or 0.7 percent, while the technology heavy Nasdaq rose 21.65, or 0.9 percent. þþBond prices rose slightly, indicating many investors are still cautious and seeking the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.61 percent from 2.63 percent late Monday. þþIn corporate news, General Motors is expected to raise $10 billion in an initial public offering as it emerges from a government-funded bankruptcy reorganization. The offering will reduce the government’s stake in the automaker to less than 50 percent and much of the money will go toward paying back the government bailout. þþPfizer shares dipped after its third-quarter revenue fell short of forecasts. It did, however, beat profit forecasts for the quarter and the pharmaceutical company raised its full-year outlook. þþIn London, the FTSE 100 was 1.2 percent higher. The DAX in Frankfurt gained 0.8 percent, while the CAC 40 in Paris was 0.8 percent higher. þþAn expected win for Republicans in the House of Representatives could set up a situation that leads to gridlock on Capitol Hill, meaning there could be a slowdown in new government spending and regulatory reform. þþExactly how the election will play out is uncertain, which is part of the reason stocks have drifted in a narrow range in recent days. The Dow Jones industrial average is less than two points below where it closed four days ago. Stocks have pushed higher in early morning trading the past few days on upbeat economic and earnings reports only to see that enthusiasm fade in the afternoon. þþAnalysts say companies have avoided hiring workers because of questions surrounding taxes and costs associated with health care and financial regulatory overhauls. Election results could provide some more clarity about those issues. þþHigh unemployment remains a significant obstacle to a strong recovery. The government said last week that the gross domestic product, the broadest measure of the nation’s economy, grew at a 2 percent annual rate during the third quarter. That’s well short of what is needed to create a significant amount of jobs. þþTraders are also waiting for the Federal Reserve to wrap up a meeting Wednesday where it is expected to announce plans to stimulate the economy. There is uncertainty about exactly how big a bond-buying program the Fed will announce, which has also tempered movements in stocks in recent days. þþBond prices rose slightly, indicating many investors are still cautious and seeking the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.62 percent from 2.63 percent late Monday. þþMarkets in Asia posted marginal gains. Japan’s benchmark Nikkei 225 stock index rose 5.26 points, or 0.1 percent, and Hong Kong’s Hang Seng index added 0.1 percent. þþMumbai’s index slid into negative territory after a decision by India’s central bank to raise key interest rates by a quarter-point to contain persistently high inflation amid strong economic growth. þþChinese shares, meanwhile, edged lower on profit-taking as investors worried over possible shifts in monetary policy to counter excess liquidity. The benchmark Shanghai Composite Index lost 0.3 percent to 3,045.43. The Shenzhen Composite Index for China’s smaller, second market dropped 0.6 percent to 1,333.29. þþ
Source: NY Times
