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Upbeat earnings results and gains in high-growth stocks helped benchmarks close in the green on Tuesday. Merck, Sprint, Amreprise Financial and Cummins posted better-than-expected quarterly results. A fall in consumer confidence and rise in home prices had little impact on investor sentiment as they are now focusing on the outcome of the FOMC meeting on Wednesday.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
 
The Dow Jones Industrial Average (DJI) gained 0.5% to close Tuesday’s trading session at 16,535.37. The Standard & Poor 500 (S&P 500) too rose 0.5% to finish at 1,878.33. The tech-laden Nasdaq Composite Index went up 0.7% to 4,103.54. The fear-gauge CBOE Volatility Index (VIX) dropped 1.9% to settle at 13.71. Total volume for the day was roughly 6.3 billion shares, lower than this month’s average of 6.6 billion. Declining stocks were outnumbered by advancing stocks on the NYSE.  For 39% stocks that declined, 58% advanced.
 
The day’s better-than-expected quarterly results had a positive impact on the benchmarks. Merck & Co. Inc. (NYSE:MRK) reported first quarter 2014 earnings of 88 cents per share, well above the Zacks Consensus Estimate of 79 cents. Earnings improved 3.5% from the year-ago period. Further, Britain’s Reckitt Benckiser Group plc’s interest to buy Merck’s consumer health business for nearly $14 billion aided the bullish mood.
 
Sprint Corporation (NYSE:S) posted narrower-than-expected quarterly loss. The third-largest U.S. wireless carrier reported first quarter 2014 loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 6 cents per share. Additionally, the first quarter loss narrowed from the year-ago loss of 21 cents per share.
 
Ameriprise Financial, Inc. (NYSE:AMP) posted first-quarter 2014 operating earnings per share of $2.04, which surpassed the Zacks Consensus Estimate of $1.87 per share. Moreover, the figure outpaced the prior-year quarter earnings per share of $1.59.
 
Cummins Inc.’s (NYSE:CMI) earnings per share increased 27.1% to $1.83 in the first quarter of 2014 from $1.44 (excluding special items) reported in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of $1.71 per share.
 
Shares of Merck, Sprint, Ameriprise Financial and Cummins surged 3.6%, 11.3%, 5.8% and 3.9%, respectively.
 
Internet stocks rebounded after suffering heavy losses on Monday. Stocks such as Amazon.com Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), LinkedIn Corporation (NYSE:LNKD) and Yelp, Inc. (NYSE:YELP) increased 1.3%, 3.6%, 1.8%, 3.5% and 6.1%, respectively. Overall, the Technology Select Sector SPDR (XLK) gained 0.7%.
 
Bio-tech stocks such as Gilead Sciences Inc. (NASDAQ:GILD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) Amgen Inc. (NASDAQ:AMGN) and Biogen Idec Inc. (NASDAQ:BIIB) increased 2.9%, 4.7%, 0.4% and 2.7%, respectively. Overall, the Health Care Select Sector SPDR (XLV) gained 0.6%.
 
On the economic front, the Conference Board reported that the Consumer Confidence Index has dropped from March’s 83.9 to 82.3 in April. The drop in consumer confidence was larger than consensus estimates of a decrease to 82.9. The Present Situation Index dropped below the key level of 80, to 78.3 in April. The Expectations Index remained almost unchanged at 84.9 in April compared with 84.8 in March.
 
Separately, the S&P/Case-Shiller Home Price Indices revealed that 20-City composite index, the leading measure of U.S. home prices, rose 12.9% year on year in February. However, the rate of growth was down from January’s year-on-year rise of 13.2%. Key housing stocks from the sector such as Lennar Corp. (NYSE:LEN) and DR Horton Inc. (NYSE:DHI) decreased 0.3% and 0.7%, respectively. Overall, the SPDR S&P Homebuilders ETF (XHB) decreased 0.1%.
 
Investors now eagerly await the outcome of the Federal Reserve’s two-day policy meeting that started on Tuesday. Market participants are expecting the central bank to trim the monthly bond purchase program and are also looking for direction as to when the Fed will raise interest rates.
 
In March, the Federal Open Market Committee had decided in its policy meeting to ‘modestly’ reduce the pace of its bond purchase program. The Fed also said despite the harsh winter weather in the months of January and February, the economy had recuperated enough to withstand a reduction in bond purchases. The central bank agreed to trim purchase of its U.S. Treasuries and mortgage-backed securities by another $10 billion starting April, bringing the bond-buyback program to $55 billion.
 
Also, in March, the Federal Reserve Chairwoman Janet Yellen had commented that interest rate hikes might happen in about six months after the end of the economic stimulus plan.  The quantitative easing program is expected to end this fall.
 
Seven out of 10 sectors of the S&P 500 ended in the green. The Financial Select Sector SPDR (XLF) led the advance as the sector rose almost 1.0%. Key stocks from the sector such as Wells Fargo & Company (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), Citigroup Inc. (NYSE:C) and American Express Company (NYSE:AXP) increased 1.1%, 1.1%, 1.9%, 1.8% and 0.8%, respectively.

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