Wall Street rallies ahead of Fed decision

By msnbc.com news services

U.S. stocks rose sharply Tuesday following an equities selloff the day before, but anxiety over Europe's debt problems was seen keeping markets jittery ahead of the Federal Reserve's assessment of the U.S. economy.

The Dow Jones industrial average was lately up over 100 points. A smaller-than-expected rise in November retail sales cut into the market?s gains.

Investors look for the Fed to hold off on any fresh economic stimulus as it weighs encouraging signs on the recovery against risks coming from Europe. A statement is due about 2:15 p.m. ET.

Spanish and Belgian short-term borrowing costs dropped sharply at auctions on Tuesday, but yields remained high for Madrid. Italian bond yields rose as the risk of sovereign rating downgrades across the euro zone kept markets on edge after steps towards fiscal integration did little to ease the debt crisis in the short term.

In the long term, however, hopes that the deal will help prevent a new crisis boosted German analyst and investor sentiment, which rose unexpectedly.

"We are stuck in a trading channel where it's hard to see the market really break out on the upside without evidence the European issues are at least halted for now," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

"It does seem the general recovery is good enough to keep the bottom from falling out, so it will be hard to see any significant moves either way probably until the end of the year," he said.

U.S. government data showed U.S. retail sales rose less than expected in November as a drop in receipts for food and beverages weighed against stronger sales of motor vehicles, tempering expectations of a strong holiday shopping season.

Best Buy Co Inc shares fell after the electronics retailer's profits fell sharply as bigger discounts squeezed margins.

Shares of Synovis Life Technologies Inc jumped after Baxter International Inc said it would acquire the company for $28 per share.

On Monday, the Dow Jones industrial average fell 1.34 percent, the S&P 500 dropped 1.49 percent and the Nasdaq Composite was off 1.31 percent.

The Associated Press and Reuters contributed to this report.

Source: http://bottomline.msnbc.msn.com/_news/2011/12/13/9414749-wall-street-higher-ahead-of-fed-decision

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