U.S. stocks on Friday mostly gained, cutting weekly losses, as investors remained cautious before a Federal Reserve policy meeting next week that should shed light on the central-bank's plans for its asset-purchasing program.
"We think stocks are showing signs of indigestion and discounting to some degree the possibility of a taper next week. Clearly, Wednesday is a big day for capital markets globally," said Jim Russell, senior equity strategist for US Bank Wealth Management, referring to the two-day Federal Open Market Committee session that starts Tuesday.
"Wall Street's confusion around this is there is a case to be made to begin now, and not to," he said.
Slightly stronger employment numbers over the last four months, elevated consumer confidence and rising home prices all argue in favor of the Fed beginning to scale back on its $85 billion in monthly bond purchases sooner rather than later. "The case against taper literally centers on numbers we got this morning. Inflation remains very tame at this time," Russell added of data from the Labor Department that had wholesale prices falling for a third month in November, down 0.1 percent after a 0.2 percent drop in October.
"Everybody is so concerned that the Fed meeting is going to surprise us with an announcement on tapering -- I don't buy it; four or five years of very accommodative policy doesn't switch on a dime, but that's what is playing with the market's blood pressure this week," said Charlie Smith, chief investment officer at Fort Pitt Capital in Pittsburgh.
Texas Industries surged after Bloomberg cited people familiar with the matter in reporting it was exploring options including a sale. Adobe Systems rallied after reporting more customers for its online software in the fourth quarter than expected.