Stocks gained Monday as investors continued to find reasons to support the market, although trading was light as most investors awaited news from the Federal Reserve's meeting on Tuesday.
The Dow Jones Industrial Average rose more than 40 points after trading up more than 60 earlier. Most of the day the blue-chip index stuck to a fairly narrow trading range, led by Cisco , McDonald'sand IBM .
Shares of Dow component Hewlett-Packard tumbled following former CEO Mark Hurd's resignation late Friday, which occured after an investigation found he had falsified expense reports to conceal a relationship with a female contractor. HP fell more than 7 percent Monday.
The S&P 500and Nasdaqwere also higher. The CBOE volatility index, widely considered the best gauge of fear in the market, rose above 22.
Verizon rose as the company held a joint press conference with
Google to discuss new Internet traffic rules.
Trading volume was light ahead of the Federal Reserve's meeting Tuesday. Many expect the Fed to keep rates near zero for "an extended period. "
Investors are wondering if Fed officials are more concerned about a recovery or an economy is heading toward deflation and slower growth. A sign of Fed's leanings will be if officials decide to renew purchases of mortgages and Treasurys.
The central bank is expected to release a statement at 2:15 p.m. on Tuesday.
"The problem today is is there isn’t any significant news to latch on to," said Bruce McCain, chief investment strategist at Key Private Bank.
McCain believes the Federal Reserve is likely to "re-up" its efforts at quantitative easing by redeploying cash from maturing mortgage-backed securities into purchases of Treasurys and mortgage securities. If the Fed takes this action, markets will be reassured, he said.
"It simply gives us a policy indication that they recognize the weakness they’ve been talking about and are providing a little bit of extra support for the economy when it may be needed," McCain said.
McDonald's reported same-store sales globally rose 7 percentand were up 5.7 percent in the US after strong sales for new drink products helped increase business. McDonald's results boded well for consumer stocks, which were slightly higher overall.
Banks were trailing with JPMorgan Chase and Bank of America among those leading financials lower.
Goldman Sachs rose slightly after reporting it had $100 million in trading losses in three days in the second quarter. The investment firm had 10 days of trading losses in all, although its trading operations were mostly profitable in the period. Morgan Stanley reported 11 days of trading losses in the second quarter.
As second quarter earnings season nears a close, Goldman Sachs issued a report saying a weak U.S. economic forecast has prompted the firm to raise its 2010 EPS estimate for the S&P 500 to $81 from $78, but to lower its 2011 EPS estimate to $89 from $93.
Goldman also lowered its 2010 forecast for the S&P 500 index to 1200 from 1250. The firm's 12-month target for the S&P is 1250, about 11 percent higher than today.