Stocks climbed into positive territory Tuesday as investors expected the Federal Reserve to pump more money into the economy, supporting equities.
The Dow Jones Industrial Average was up almost 50 points after falling more than 80 earlier in the session. Travelers, Intel and Pfizer rose. Cisco , JPMorgan and General Electricfell.
The S&P 500 and the Nasdaq were also higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 22.
Health care, consumers staples, and energy sectors rose while materials and telecoms fell.
The market's positive tone comes a day after the major indexes fell about a half percentin the previous session, taking some of the steam out of a September rally.
Some investors may be positive on the market because of a greater likelihood the Federal Reserve will begin quantitative easing. Hedge fund advisor Medley Global Advisors said in a report that the Fed is preparing a fresh round of quantitative easing measuresto battle the lackluster economy, according to Reuters.
The Fed indicated last week that they would act if things don't get better in the economy, which is different than the past, when they said they would act if things got worse, Bob Doll, chief equity strategist at BlackRock, said on CNBC.
“That means the probability has gone up a bunch and in the near-term, that’s got to be positive for equities,” Doll said. “You know what it’s done to the dollar and to the price of gold — it’s likely positive for risk assets and the hope has to be that it all translates to better news for the real economy and the nominal economy.”
The quantitative easing measures by the Fed may involve more small-scale bond buying programs, according to The Wall Street Journal. Last year the Fed carried out large bond purchases to add liquidity to the markets.
Shares of Apple recovered after dropping nearly 6 percent following speculation that top exeecutive Tim Cook would be going to Hewlett-Packard to replace former CEO Mark Hurd, but analysts dismissed the rumors, saying Cook is a favorite to succeed Apple's CEO Steve Jobs.
HP shares rose ahead of its analyst meeting at its headquarters. Expectations remain that a replacement for ousted CEO Hurd is imminent.
Meanwhile, Research In Motion fell almost 3 percent even after after the smartphone maker unveiled its answer to Apple'siPad, the BlackBerry PlayBook.
Shares of AOL advanced after the Internet services firm said it would acquire TechCrunch, a technology blog and network, as it tries to remake itself into a Web entertainment and news powerhouse.
And Oracle rose after the tech giant sued Micron for alleged price fixing of microchips.
Shares of Jabil Circuitslumped almost 5 percent after the electronics-component maker said that its revenue was at the low end of its guidance, and it forecast a lower-than-expected revenue target for the first quarter.
In other earnings news, Walgreen soared more than 10 percent, to lead the S&P 500, after the drug-store retailer posted strong earnings, thanks to robust pharmacy sales. The company also reported better same-store sales. Shares of rival CVS were also higher.
Target shares were mostly flat after Credit Suisse downgraded the retailer to "neutral" from "outperform" and lowered its target price for the stock to $58 a share from $64.
Barnes & Noble shareholders backed Chairman Leonard Riggio in a contentious proxy battle.
KB Home fell after Goldman Sachs downgraded the homebuilder to "sell" from "neutral," citing high expenses and also cut the company's target price to $10 from $13 a share. In addition, Citigroup cut its target price for the stock to $14 from $17.
Goldman had more positive comments for rival Pulte as it upgraded the homebuilder to "neutral" from "sell," and raised its price target to $9 from $8.