By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market rose on Tuesday,
building on the previous day's rally, as investors took comfort
that Russia's annexation of Crimea does not look like it will
devolve into a violent confrontation.
Markets rallied on Monday after the European and U.S. sanctions
were limited to visa bans and asset freezes. Tuesday's annexation
of Crimea, which happened without a prospect of a full-blown
invasion, eased investors' fears and allowed them to focus on
fundamentals.
The S&P 500 (SPX) added 13.35 points, or 0.7%, to 1,872.17,
trading just several points below record closing high.
The Dow Jones Industrial Average (DJI) traded near session
highs, adding 105.35 points, or 0.7%, to 16,352.41, with Microsoft
Corp leading the gains.
The Nasdaq Composite (RIXF) gained 51 points, or 1.2%, to
4,331.03.
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Russia's President Vladimir Putin on Tuesday signed a treaty to
annex Crimea after an overwhelming majority of its citizens on
Sunday voted to leave Ukraine. In his prepared remarks, Putin also
said he did not seek to partition Ukraine. For now.
As the events in Russia and Ukraine stole the show, reaction to
a pair of economic reports that were in line with expectations was
muted. Investors shifted their attention to the Federal Reserve's
two-day policy-setting meeting set to begin on Tuesday.
"While countries engage in a rhetoric over the legality of
Russia's move to annex Crimea, they also realize that it is
difficult to impose too many sanctions without hurting their own
interests," said Brad Sorensen, director of market and sector
research at Schwab Center for Financial Research.
"Markets are relieved for now that there is not going to be a
military action in the immediate future," he added.
In economic news, construction on new U.S. homes fell slightly
in February, but in a sign that work will pick up as the weather
warms, builders filed more permits to start new projects -- mainly
on multi-dwelling units like condos and apartments. The previous
months' number was revised higher. Also: Spotlight on the economy:
Is housing construction about to warm up?
Ian Shepherdson, chief economist at Pantheon Macroeconomics
wrote housing starts numbers 'could have been worse, but
single-family permits numbers are worrying'.
"The not-so-good news is that all the increase in permits in
February was in the volatile multi-family component, while
single-family fell for the third straight month to their lowest
level since Jan 13. The trend here is clearly downwards, and SF
starts are even weaker," he wrote in a note.
Consumer prices in the U.S. rose slightly in February because of
higher food and housing costs, but overall inflation remained
quiet, according to the latest government figures.
The Fed will release a policy statement and updated economic
forecasts on Wednesday afternoon. Chairwoman Yellen is due to hold
a news conference after the meeting, the first to be led by her.
Analysts expect the Fed will roll out a new low-rate pledge and
further tapering of its monthly bond-buying program.
Among individual stocks, Hewlett-Packard (HPQ) jumped 3.7% after
Barclays upgraded the stock to overweight from equal weight.
Barclays analyst Ben Reitzes said H-P "could gain share for several
quarters" in the low-end server business at the expense of Lenovo
which has acquired IBM Corp.'s X86 server business.
GameStop Corp. (GME) shares dropped 4.2% after Wal-Mart Stores
Inc. (WMT) said it would allow customers to hand in used videogames
in exchange for gift cards, which can be used in its retail stores
or online. The change in policy from Wal-Mart Stores could eat away
at GameStop's dominance of the $2 billion used videogame market in
the U.S.
Shares of FutureFuel Corp.(FF) rose 15% as the biofuels company
late Monday reported a more-than-fourfold jump in profit. Hertz,
Adobe, Oracle are stocks to watch Tuesday.
Coach Inc. (COH) shares rose 1.5% after Barclays initiated
coverage of the stock with 'equalweight' rating.
Shares of Hertz Global Holdings, Inc. (HTZ) gained 1.4% after
the auto-rental group posted fourth-quarter adjusted earnings. It
also said it received board approval to proceed with a spinoff of
its equipment-rental business that is expected to close by early
next year.
Oracle Corp. (ORCL) is scheduled to report fiscal third-quarter
results after the bell, with analysts looking for earnings of 70
cents a share on sales of $9.36 billion. Shares were up 0.9%.
In other markets, gold (GCJ4) fell on Tuesday in volatile
trading as investors looked ahead to the Fed meeting. Gold lost
ground Monday as investors put money back into stocks. The dollar
fell sharply against the Japanese yen (USDJPY), also reversing some
of the previous day's moves. Oil prices (CLJ4) were marginally
higher.
European stocks gained ground rising 0.6%. The Nikkei 225 index
largely tracked Wall Street gains from Monday, with that index
gaining close to 1%. The Shanghai Composite Index was flat.
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