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Wall Street climbs as Fed meeting kicks off

FILE PHOTO: A man walks a dog in the shade away from the midday sun past the New York Stock Exchange (NYSE) building in Manhattan, during hot weather in New York City, New York, U.S., August 11, 2020. (REUTERS/Mike Segar/File Photo)

BY MEDHA SINGH AND DEVIK JAIN

Tech stocks pushed Wall Street higher on Tuesday as positive U.S. factory data fueled optimism around an economic rebound, while investors looked for more stimulus from the Federal Reserve as the central bank kicks off a two-day meeting.

The tech index <.SPLRCT> jumped 1.6% as it continued to recover from a brutal sell-off earlier this month that knocked the S&P 500 and Nasdaq off their all-time highs.

Apple Inc <AAPL.O> rose 2.5% ahead of a virtual product launch, where it is expected to unveil updated watches and iPads, but no iPhones.

In its first policy meeting since Fed Chair Jerome Powell announced a more accommodative stance on inflation, the central bank could switch its Treasury purchases toward more long-dated debt to keep long-term yields low, some strategists said.

“The market is getting a tailwind from expectations the Fed will continue to keep interest rates historically low,” said Sam Stovall, chief investment strategist at CFRA in New York.

“It makes the intrinsic value models point to very high returns for the stock market in the year ahead.”

Expectations from the Fed have increased amid a stalemate in talks for fiscal relief and economic reports suggesting an uneven recovery from the coronavirus-induced recession.

Data on Tuesday showed U.S. factory output increased strongly in August. Separately, U.S. import prices increased more than expected for the same month, supporting the view that inflation pressures were building up.

Earlier in the day data showed China’s industrial output accelerated the most in eight months in August.

At 9:56 a.m. ET, the Dow Jones Industrial Average <.DJI> was up 125.30 points, or 0.45%, at 28,118.63, the S&P 500 <.SPX> was up 30.93 points, or 0.91%, at 3,414.47. The Nasdaq Composite <.IXIC> was up 168.81 points, or 1.53%, at 11,225.46.

Tesla Inc <TSLA.O> jumped 5%, rising for the fifth day, as anticipation heats up for its “Battery Day” event next week, where Chief Executive Officer Elon Musk is expected to tout the latest improvements in the electric-car maker’s battery technology.

Carnival Corp <CCL.N> dropped 8.5% after it warned of a quarterly loss of $2.9 billion, as the COVID-19 pandemic brought the cruise industry to a virtual standstill.

Advancing issues outnumbered decliners for a 1.99-to-1 ratio on the NYSE and a 1.89-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and no new low, while the Nasdaq recorded 42 new highs and four new lows.

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