By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks ended Tuesday slightly
higher, with the main benchmarks gaining for the third consecutive
day. However, gains were muted as headlines of violence in Iraq did
not abate.
After the initial wobble, investors shrugged off mildly
disappointing economic reports on inflation and the housing
market.
Consumer prices rose sharply in May, while a number of housing
starts declined by more than expected. Meanwhile in Iraq,
government forces fought with militant rebels, killing 28 ISIS
fighters, according to the Wall Street Journal report.
The S&P 500 (SPX) closed 4.21 points, or 0.2%, higher at
1,941.99. The Dow Jones Industrial Average (DJI) added 27.48
points, or 0.2%, to 16,808.49.
The Nasdaq Composite (RIXF) ended the day up 16.13 points, or
0.4% at 4,337.23. The Russell 2000 (RUT) closed 9.8 points, or
0.8%, higher at 1,176.62, according to preliminary results on
FactSet.
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action.
Liz Ann Sonders, chief investment strategist at Charles Schwab
said that even with the tick-up in the inflation rate, it remains
below the Fed's target.
"Today's CPI data was slightly higher than expected and did not
come to us as a big surprise, but certainly the uptick sparked
fears of a possible risk of inflation," Sonder said.
"On the housing starts, while the headline number was
disappointing, the less noisy year-over-year trend is still
improving. There are more housing starts this year then there were
last year and that's a positive," she added.
In economic news, U.S. consumer prices rose sharply in May for
the second straight month, prompting fears that the Federal Reserve
may begin tightening the monetary policy sooner than the markets
are expecting.
Construction on new U.S. homes fell by 6.5% in May and builders
trimmed plans for future projects in another sign that a hoped-for
spring revival in the housing market remains elusive.
Officials at the Federal Open Markets Committee began their
two-day policy-setting meeting.
Read: What brokerages are saying about the FOMC meeting on
Wednesday.
* In corporate news, Nuance Communications Inc. shares climbed
2.5% after reports on Monday that the speech-recognition software
maker had held talks with suitors, including Samsung Electronics
Co. and private equity funds. Nuance shares are up over 27% this
year so far. Tesla Motors Inc. shares rose 3.1% building on an 8.8%
gain in the previous session over reports about a possible
collaboration with its competitors. Tesla shares have climbed 53%
year to date. Shares of Gentiva Health Services Inc. rallied 5.2%
after Kindred Healthcare Inc. sweetened its bid for the home-health
and hospice company. Shares in E-Trade Financial Corp and Charles
Schwab Corp rallied 7.7% and 5.5% respectively with the Senate
hearing on whether high-frequency trading hurts the markets.
* In overseas equity markets, European stocks closed higher.
Asian stock were mostly lower, but the Nikkei bucked the trend and
finished higher.
* Among commodities, gold for August delivery fell Tuesday,
posting the first loss in seven sessions, as concerns abated
slightly about tensions in Iraq, weighing on the flight to
safe-haven assets. Oil futures lost ground Tuesday, giving back
some recent gains ahead of an update on weekly U.S. supply levels
as worries about imminent risks to oil production in Iraq
soften.
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