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On Tuesday at 10:36 a.m. ET, the 30-stock Dow Jones industrial average was higher by 43.08 points, or 0.44%, at 9,911.04. The broad Standard & Poor's 500-stock index was up 1.56 points, or 0.15%, at 1,068.51. The tech-heavy Nasdaq composite index fell 6.37 points, or 0.30%, to 2,135.48.
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The latest montly investment outlook from PIMCO bond guru Bill Gross suggests that even with a rebound in growth in late 2009, the Federal Reserve will remain reluctant to hike rates for 12-18 months of 4%+ nominal growth before moving from zero rate policy. Gross also sees an end soon to the rally in risk assets due to continuing risk of "debt deflation in corporate and household balance sheets." In light of this, writes Gross, "investors must recognize that if assets appreciate with nominal GDP, a 4-5% return is about all they can expect even with abnormally low policy rates. Rage, rage, against this conclusion if you wish, but the six-month rally in risk assets, while still continuously supported by Fed and Treasury policymakers, is likely at its pinnacle."
Sixteen of the twenty cities covered posted price gains on the month, led by San Francisco, up 2.59%. Cleveland prices declined 1.02%.
Fears that Congress won't renew the home buyer credit and a rout in commodity prices caused a sell-off Monday, along with jitters over larger banks, notes Action Economics. The Dow industrials have fallen 213 points in the past two sessions.
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Earnings remained in focus Tuesday, with U.S. Steel (X) posting a loss, but rallying after it was smaller than expected.
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The U.S. Case-Shiller home price index rose 1.18% to 146.00 in August for the 20-city composite, from a revised 144.30 in July (was 143.05). June was revised up a bit as well to 141.97 from 141.42. On a year-over-year basis, the index is down 11.32%, compared to -13.26% year-over-year previously. The 10-city composite index rose 1.03% to 156.4 from a revised 154.81 in July (was 154.69). This makes it three consecutive monthly increases for both indexes.
In economic news Tuesday, U.S. consumer confidence dove to 47.7 in October, after slipping to 53.4 in September (revised from 53.1 previously). The October figure is much worse than expected, but a decline was the risk after the drop in the University of Michigan sentiment data. The index was 38.8 a year ago. The present situation component fell to 20.7 from 23.0 (revised from 22.7), and was 43.5 last October. The expectations component declined to 65.7 from 73.7 (revised from 73.3), and was 35.7 last year. The inflation expectations index was steady at 5.3% (September's 5.2% was revised up from 5.2%). It was 6.8% last year.
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stocks were mixed in volatile trading Tuesday morning following reports the Conference Board's October consumer confidence index fell to 47.7 from 54.4 in September, while the S&P Case-Shiller 20-city house price index rose 1.2% in August, the third consecutive monthly increase.
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In the energy sector, BP (BP) beat earnings targets by a wide margin, rallying 5% after third-quarter profits dropped by a lower than expected 34%.
Treasuries were higher before a $44 billion auction of two-year notes Tuesday afternoon. The dollar index moved higher, erasing earlier losses. Gold futures were falling. Oil futures were lower.
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On the New York Stock Exchange, 16 stocks were lower in price for every 10 that advanced. Breadth on the Nasdaq was flat.
An apparent early sell program roiled markets at the outset, according to S&P MarketScope..