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US stocks creep higher ahead of Federal Reserve meeting

Published 20/09/2016

It marked another cautious day of trading on Wall Street (AP)
It marked another cautious day of trading on Wall Street (AP)

US stocks have inched higher in another cautious day of trading as investors kept an eye on central banks in the US and Japan.

Health care and household goods companies led the way, while energy companies slipped.

Major market indexes were higher all day but returned most of those gains at the close of trading, rising just enough to cancel out Monday's small losses.

Drug companies helped health care stocks make some modest gains, while Exxon Mobil fell on reports it is being investigated by securities regulators.

Bond yields slipped, and the dollar was little changed as investors waited decisions from the Federal Reserve and the Bank of Japan.

Since investors doubt the Federal Reserve will raise interest rates on Wednesday, they may focus instead on the Fed's statement and a press conference led by Fed chair Janet Yellen.

The Dow Jones industrial average gained 9.79 points, or 0.1%, to 18,129.96.

The Standard & Poor's 500 index added 0.64 points to 2,139.76. The Nasdaq composite picked up 6.33 points, or 0.1%, to 5,241.35.

On the New York Stock Exchange, more stocks fell than rose. That was the reverse of Monday, when major indexes fell but more stocks were up than down.

Gilead Sciences gained 2.79 dollars (£2.13), or 3.5%, to 81.78 dollars (£62.71) after the hepatitis C drugmaker completed a five billion (£3.83 billion) debt offering. Gilead said it may use the cash to make a deal, and Jefferies and Co analyst Brian Abrahams said he thinks the company is getting close to at least one acquisition.

Ascena Retail Group, the parent of Ann Taylor, Lane Bryant and Dress Barn, dropped to a six-year low after the company reported weak quarterly results and gave a forecast that fell short of investor expectations.

Ascena bought Ann Taylor a year ago and also struggled with discounts from competitors and shaky demand. Its stock lost 2.43 dollars (£1.86), or 29.9%, to 5.69 dollars (£4.36).

Allergan, the maker of Botox, announced yet another acquisition as it agreed to buy Tobira Therapeutics. Tobira is studying drugs that treat symptoms of non-alcoholic steatohepatitis, a disease that triggers inflammation that can lead to cirrhosis, cancer and liver failure.

Tobira stock has tumbled this year after it reported mixed results from a mid-stage trial of one of its drugs. The shares finished at 4.74 dollars (£3.63) on Monday, but Allergan agreed to pay 28.35 dollars (£21.73) per share upfront, and could pay another 49.84 dollars (£38.21) if Tobira's drugs succeed in clinical testing, win regulatory approval, and meet sales targets.

Tobira shares skyrocketed to 38.91 dollars (£29.83) and Allergan fell 6.62 dollars (£5.07) , or 2.7%, to 238.67 dollars (£183).

The Commerce Department said the pace of home construction slowed down in August as fewer homes were built in the South of the country. Monthly housing figures can be volatile and housing stats have grown this year, but the report hurt the shares of homebuilders. PulteGroup gave up 58 cents, or 2.9%, to 19.29 dollars (£14.79) and Lennar, which reported strong quarterly results, shed 1.59 dollars, or 3.5%, to 43.50 dollars (£33.35) .

Hotel chains Marriott and Starwood climbed after regulators in China approved the 14.41 billion dollar (£11 billion) deal which will bring them together to create the world's largest hotel chain.

Marriott, which is buying Starwood, said it expects to complete the deal on Friday. Its stock added 1.60 dollars (£1.22), or 2.3%, to 69.94 dollars (£53.63), and Starwood rose 1.81 dollars (£1.38), or 2.4%, to 76.90 dollars (£58.96).

Royal Caribbean Cruises added 2.93 dollars (£2.24), or 4.5%, to 68.41 dollars (£52.45) after the company raised its quarterly dividend to 48 cents from 37.5 cents.

Bond prices rose. The yield on the 10-year US Treasury note fell to 1.69% from 1.71%. The dollar rose to 101.84 yen from 101.81 yen. The euro slipped to 1.1157 from 1.1178.

Benchmark US crude picked up 14 cents to 43.44 dollars a barrel in New York.

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