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US STOCKS-Wall St ends higher as Fed seen easing soon

Published 10/12/2010, 04:32 PM
Updated 10/12/2010, 04:36 PM

* Fed discussed further money printing "before long"

* Oil drillers rise as deepwater ban lifted

* Intel shares rise after the bell, following results

* Dow up 0.1 pct, but S&P up 0.4 pct, Nasdaq up 0.7 pct * For up-to-the-minute market news see [STXNEWS/US] (Updates to close)

By Rodrigo Campos

NEW YORK, Oct 12 (Reuters) - U.S. stocks hit fresh 5-month highs on Tuesday as details from the Fed's latest meeting showed the U.S. central bank may once again flood markets with cheap cash "before long" to further boost growth.

The minutes from the Federal Reserve's Sept. 21 meeting served as another strong signal for a stock market that has surged for weeks on rising hopes for more Fed action. The S&P 500 index is up 11.5 percent since the start of September.

"The (stocks) market should continue to be supported by these positive comments from policy-makers over the next few days," said Zach Pandl, an economist at Nomura Securities International in New York.

Shares of drilling contractors rose after the Obama administration lifted its ban on deepwater drilling seven weeks ahead of schedule. For details see [ID:nN12173911].

U.S.-traded shares of Transocean Ltd climbed 4.7 percent to $64.81 and Diamond Offshore gained 4 percent to $69.37. The PHLX oil services sector index <.OSX> rose 1.7 percent.

Also on investors' minds were results from Intel Corp , posted after the closing bell. Its shares advanced 1.1 percent to $19.77 during regular trading hours and rose another 1.7 percent after hours.

Apple , up 1.1 percent at $298.54, led the Nasdaq's advance after Barclays raised its price target on the company's stock.

Technology stocks are at their cheapest in 20 years and the weaker U.S. dollar will likely benefit the entire sector, said hedge fund industry pioneer Lee Ainslie. [ID:nN12184075].

The Dow Jones industrial average <.DJI> gained 10.06 points, or 0.09 percent, to 11,020.40. The Standard & Poor's 500 Index <.SPX> rose 4.45 points, or 0.38 percent, to 1,169.77. The Nasdaq Composite Index <.IXIC> added 15.59 points, or 0.65 percent, to 2,417.92.

The expectation of more cheap cash helped lift bank stocks. Bank of America rose 2.8 percent to $13.52 and the KBW bank index <.BKX> gained 1.5 percent.

Shares of Pfizer Inc , the world's largest drugmaker and a Dow component, gained 0.5 percent to $17.47 after it agreed to buy King Pharmaceuticals Inc for $3.6 billion. King Pharma shares jumped 39.4 percent to $14.15. [ID:nN12164348].

The dollar index <.DXY>, a gauge of the greenback against a basket of currencies, erased its earlier gain and was down 0.16 percent at the close. Investors have of late used fluctuations in the U.S. currency as a trigger to move into or out of stocks. The 30-day correlation between the index and the S&P 500 <.SPX> ticked down to -0.90.

China's bid to cool down its economy partly offset the Fed's resolve, as it sparked concerns it could crimp global growth. An official Chinese newspaper reported the government raised bank reserve requirements by 50 basis points, the fourth hike this year, due to excessive lending.

The report confirmed a Reuters story on Monday. [ID:nTOE69A05I] and [ID:nTOE69A03Y]

About 7.3 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, just below the 20-day moving average of about 7.47 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of slightly more than 4-to-3, while on the Nasdaq, three stocks rose for every two that fell. (Reporting by Rodrigo Campos; Editing by Jan Paschal)

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