While you were sleeping: UPDATED Stocks, bonds rise as Fed change unlikely

Wall Street rose, as did US Treasurys, as the Federal Reserve began its two-day meeting.

The Federal Open Market Committee is not expected to announce an interest rate increase this time, though Wednesday's post-meeting press conference by chairwoman Janet Yellen will be closely watched for hints on when the central bank will do so.

Traders see a 22% chance of a Fed hike tomorrow, according to Bloomberg.

"They want to maintain market expectations for a rate hike in case they want to raise rates in December if conditions warrant one," Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina, told Reuters.

Investors are also awaiting a policy decision from the Bank of Japan at the end of its meeting on Wednesday.

"Investors have become more comfortable knowing that a Fed rate hike decision will be put off until future meetings, but there is more uncertainty about what Japan will do," Paul Springmeyer, investment managing director at the Private Client Group, US Bank in Minneapolis, Minnesota, told Reuters.

Market ends on low
Wall Street advanced though the market ended on its low. At the close, the Dow Jones Industrial Average gained 9.79 points, or 0.05%, to 18,129.96. The Nasdaq Composite Index was up 0.1% at 5241.35 and the Standard & Poor's 500 Index moved just 0.03% to 2139.35.

Treasury bonds rose, pushing the yield on the benchmark 10-year note three basis points lower to 1.69% in New York.

"Investors are seeking affirmation that central banks are going to continue to be somewhat friendly," Jim Davis, regional investment manager for The Private Client Group of US Bank, told Bloomberg.

In the Dow, gains by Merck and General Electric outweighed declines in Exxon Mobil and DuPont.

The US has begun an investigation into how Exxon accounts for the value of its reserves in the wake of the drop in the price of oil in the past few years.

Allergan in biotech deal
In corporate news, Allergan said it agreed to acquire biopharmaceutical company Tobira Therapeutics at a significant premium. Shares of Tobira, which develops therapies for liver diseases, surged more than 700% while Allergan fell 2.7%.

Shares of Royal Caribbean Cruises gained 4.5% after the company raised its quarterly dividend.

US crude oil rose 0.3% to $43.44 a barrel.

The Atlanta Fed said its GDPNow model forecast for the US economy will grow 2.9% in the third quarter, down from a 3.0% estimate on September 15.

And in the latest economic data, a Commerce Department report showed US housing starts fell more than expected in August, sliding 5.8% to a 1.14 million annualised rate.

"It looks like housing is taking a bit of a breather in the short term," Jacob Oubina, senior US economist at RBC Capital Markets in New York, told Bloomberg.

"I don't think it's anything to be overly concerned about, but I don't think housing is going to be as big a contribution" to growth in the second half of the year, he said.

In Europe, the Stoxx 600 Index ended the session with a decline of 0.1% from the previous close. France's CAC 40 index fell 0.1%. Germany's DAX index rose 0.2%, while the UK's FTSE 100 Index advanced 0.3%.

(BusinessDesk)

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