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With Spain on the boil and world leaders meeting, US stocks could tread water again Tuesday as the Fed starts its two-day meeting.
“It’s the only thing keeping us (stocks) elevated here,” said Miller Tabak strategist Peter Boockvar, of the Fed meeting. “Fundamentally, the market belongs much lower, but everybody thinks the Fed’s extending Operation Twist or will pull something else out of its hat.”
In Operation Twist, the Fed has been selling shorter dated Treasurys while buying the same amount of longer dated securities in a bid to keep interest rates low. Many analysts believe the Fed Wednesday could extend the program, while it watches developments in Europe and the state of the U.S. economy.
“I think the Fed probably wants to do a little something, and that little something probably is extending its Operation Twist instead of it expiring at the end of this month. But largely, the Fed is going to want to keep its powder dry ,” said Larry Kantor, managing director and head of research at Barclays.
Stocks Monday were mixed, with the technology driven Nasdaq up 0.8 percent, or 22 points to 2895, and the S&P 500 up almost 2 points to 1344.
Applewas a standout on the Nasdaq, rising 2 percent on the day after it broke above its 50-day moving average, at $578.
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