10-29-13 11:39 AM EDT | Email Article

By Victor Reklaitis, MarketWatch


U.S. stocks strolled higher on Tuesday, helped at the margin by earnings from Pfizer Inc. and others, but trimmed gains after a report showed consumer confidence retreated this month.


The S&P 500 index (SPX) was last up 5 points, or 0.3%, to 1,767. Telecom and consumer staples fared best among S&P 500 sectors, while materials and utilities performed worst.


The Dow Jones Industrial Average (DJI) gained 56 points, or 0.4%, to 15,625. AT&T Inc. (T) and Pfizer Inc. (PFE) rose the most among blue chips, with Pfizer finding buyers in the wake of its quarterly earnings report before the open. AT&T added 2%, while Pfizer advanced 1.8%.


The Nasdaq Composite(RIXF) tacked on 4 points, or 0.1%, to 3,944. The tech-heavy index was weighed down by a 0.6% decline for shares in Apple Inc., which posted earnings late Monday.


The main indexes pulled back from their session highs after a couple of economic reports at 10 a.m. Eastern time, including one that showed consumer confidence made a surprisingly steep drop in October. Earlier Tuesday, the S&P 500 had been up as much as 7 points, while the Dow had advanced by more than 60 points.


"The confidence data was something that did weigh on the market," said Mark Luschini, chief investment strategist at Janney Montgomery Scott, in a phone interview on Tuesday. But he noted the drop in confidence may have been mostly due to "Washington dysfunction," meaning the government standoff earlier this month, saying he's waiting on additional confidence data in the next month or two.


Tuesday's moves by the major indexes followed narrowly mixed action on Monday, when the Dow and Nasdaq ended close to the flat line, and the S&P 500 inched up to reach an all-time high for a second straight session.


The main event on Tuesday for markets is expected to be the Federal Reserve starting its two-day policy meeting. Most analysts expect the central bank to stand pat on its accommodative stance, given the Fed's coming change in leadership, the recent weak economic data and the government shutdown and debt-ceiling battle earlier in the month.


In its accompanying policy statement, however, the Fed is likely to keep its options open about any tapering of its purchases before the end of the year. The decision is expected after the meeting ends on Wednesday.


In September, market participants expected the policy makers to start scaling back the $85-billion-a-month asset-purchase program, but the central bank surprised by waiting for more evidence of an economic recovery before pulling the tapering trigger.


"With [Chairman] Ben Bernanke now in the autumn of his tenure at the Fed and no press release scheduled for this meeting, the overwhelming consensus is that nothing will happen on the taper front. But the wrong footing at the September meeting has traders a little cautious and reminded them that the 'consensus' can be 100% wrong," said Jonathan Sudaria, dealer at London Capital Group, in a note. He added that investors should "expect markets to tread water" until after the Fed decision.


Janney's Luschini said if the Fed statement suggests the economy hasn't deteriorated, that could imply a January tapering for the central bank's bond-buying program. But if there has been some deterioration, "I'd probably say that pushes the odds out to a March tapering," the strategist said.


Data deluge


While investors were absorbing a flurry of economic reports on Tuesday, strategists have played down their significance. Most of Tuesday's reports should have come out earlier in October, providing a more timely reading on economic activity, but they were delayed by the U.S. government shutdown.


"The good news is it's retail sales day -- the bad news is it is the September reading and so it is hard to make the claim that the flurry of data on Tuesday morning will mean that much to investors," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co., in emailed comments on Tuesday.


Before the open, the Commerce Department said September retail sales dipped, while economists had expected no change. The Labor Department said the producer-price index slipped in September, missing expectations for a slight rise.


Also before the bell, S&P/Case-Shiller reported its home-price index rose 1.3% in August, the smallest monthly gain since March.


At 10 a.m. Eastern time, the Commerce Department said business inventories rose 0.3% in August, below expectations for 0.4%. In addition, the Conference Board reported confidence among American consumers fell in October to the lowest level in six months. Its consumer-confidence index slumped to 71.2 in October from a revised 80.2 in September. Economists polled by MarketWatch had projected the index to drop to 75 in October.


Kors to join S&P 500


Michael Kors Holdings Ltd. (KORS) rose 0.7% after S&P Dow Jones Indices late Monday said the clothing and accessories retailer will join the S&P 500 index after the close on Friday.


LinkedIn Corp. (LNKD) is likely to have earned 32 cents per share in the third quarter on revenue of $384.8 billion when the company reports after the close of trading. The stock was down 0.2%.


Online review company Yelp Inc. (YELP) is expected to have earned 7 cents a share in adjusted third-quarter earnings, on revenue of $59.4 billion. Shares in Yelp fell 1.6%.


In other financial markets, most European equities were higher, while Asian stocks closed mixed. Gold and oil prices were lower, pressured by a stronger dollar(DXY).


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(END) Dow Jones Newswires

October 29, 2013 11:39 ET (15:39 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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