Stocks finished modestly higher Tuesday, rebounding from their worst levels as the minutes from the Federal Reserve's Aug. 8 monetary policy meeting showed less dissent than some feared, but provided few clues on the future direction of interest rates. The Conference Board's consumer confidence index skidded to an eight-month low, while oil tumbled below $70.
The Dow Jones industrial average rose 17.93 points, or 0.16%, to 11,369.94. The broader Standard & Poor's 500 added 2.5 points, or 0.19%, to 1,304.28. The tech-heavy Nasdaq composite gained 11.6 points, or 0.54%, to 2,172.3.
Volume was light. NYSE breadth was decidedly positive, with 23 issues advancing for every 10 declining, while Nasdaq breadth was 20-10 positive.
The Fed minutes were in focus Tuesday. The Aug. 8 pause was a "close call" and does not "mark the end of the tightening cycle," the minutes said. More rate hikes could be needed to control inflation, according to the release, though most policymakers said the current policy stance may prove "satisfactory."
Policymakers appeared less hawkish on inflation than expected, some analysts say. "Although the decision to pause was a 'close call,' the decision does not appear to have been particularly contentious," according to Goldman Sachs.
Others on Wall Street take precisely the opposite view. "We see the minutes as reflecting more concern about the inflation outlook than we had thought was present on Aug. 8," says Lehman Brothers economist Drew Matus.
Either way, the minutes don't shed much light on what the Fed will do at its Sept. 20 monetary policy meeting, some analysts point out. "The mixed outlook from the Fed is consistent with the inherent uncertainties between the economy and inflation," says Action Economics.
In a speech Tuesday, Dallas Fed President Richard Fisher said the Fed remains on guard against inflation. He warned that inflation is hard to stop once it becomes entrenched.
In other economic reports, the Conference Board's consumer confidence index fell to 99.6 in August, its lowest level of the year, down from 107.0 in July. That's much weaker than expected and corresponds with the recent drop in the University of Michigan's consumer sentiment gauge, says Action Economics.
The economic calendar Wednesday holds a preliminary reading on second-quarter gross domestic product. Also on tap is the ADP employment report, ahead of Friday's closely watched payrolls figures.
Among stocks to watch Tuesday, BP (BP) was lower on a report federal regulators are investigating the oil giant over whether it manipulated U.S. crude oil and unleaded gasoline markets.
Jet maker Boeing (BA) was lower after the company's board authorized a plan to buy back up to $3 billion of its own shares, or 5% of its publicly traded stock.
Shares of Intel (INTC) rose after the chipmaker introduced a new version of its high-end Xeon server chip five months ahead of schedule.
Automaker General Motors (GM) announced that it will offer bonus cash on many of its 2006 and 2007 models through Sept. 5.
In earnings news, German pharmaceuticals company Bayer (BAY) reported 11% higher second-quarter profit, below analyst forecasts. Network software maker Novell (NOVL) was set to post quarterly results after the close.
Elsewhere, soft-drink behemoth Coca-Cola (KO) said it acquired a controlling stake in Kerry Beverages Limited, a joint venture with Hong Kong-based conglomerate the Kerry Group.
The stock options probe continued to widen. Barnes & Noble (BKS) was lower on news the bookstore chain said it received a subpoena from the U.S. Attorney for the Southern District of New York regarding the company's stock option practices.
In the energy markets, October West Texas Intermediate crude oil futures closed down 90 cents at $69.71 a barrel as storm worries faded.
European markets finished mixed, giving up early gains. In London, the Financial Times-Stock Exchange 100 index rose 9.7 points, or 0.16%, to 5,888.3. Germany's DAX index slipped 7.97 points, or 0.14%, to 5,847.02. In Paris, the CAC 40 index was up 11.8 points, or 0.23%, to 5,160.32.
Asian markets ended lower. Japan's Nikkei 225 index advanced 127.97 points, or 0.81%, to 15,890.56. In Hong Kong, the Hang Seng index gained 160.99 points, or 0.2%, to 16,922.29. Korea's Kospi index climbed 16.72 points, or 1.26%, to 1,344.61.
Treasuries were mixed, bouncing from session lows following the inconclusive Fed minutes. The 10-year note edged up in price to 100-22/32 for a yield of 4.79%, while the 30-year bond crept lower to 93-10/32 for a yield of 4.93%. The lack of a broader Fed minority pushing for further rate hikes encouraged bond bulls, says Action Economics.