Stocks inched higher as the Federal Reserve began its historic two-day Federal Open Market Committee (FOMC) meeting.

First, the scoreboard:

  • Dow: 15,529.7, +34.9 +0.2%
  • S&P 500: 1,704.7, +7.1, +0.4%
  • NASDAQ: 3,745.7, +27.8, +0.7%

And now the top stories:

  • The economic data was pretty light and uneventful today ahead of tomorrow’s big FOMC announcement, which is when economists expect the Fed to announce the tapering of its massive stimulative bond-buying program.
  • The consumer price index climbed by just 0.1% in August. Excluding food and energy, prices climbed by 0.1%. Both measure were a bit lower than economists’ expectations.
  • “Inflation pressures remain fairly tame at present, but the trend is drifting moderately higher,” said Deutsche Bank’s Joe LaVorgna. “This should give monetary policymakers, who convene for their two-day FOMC meeting today, greater confidence that the inflation soft-patch in H1 was indeed transitory. As a result, some fence-sitting participants may feel marginally more comfortable proceeding with a mini-taper of quantitative easing.”
  • The NAHB’s housing market index was unchanged at 58 in August. In other words, homebuilder sentiment continues to sit at its highest level since November 2005. “Today’s data bode well for August housing starts (0.900M forecast vs. 0.896M previous) which are reported tomorrow morning,” added Deutsche Bank’s LaVorgna.
  • “We maintain our longstanding view that, while no time is perfect, the best opportunity this year for the Fed to initiate a cutback in its asset purchases will be at the upcoming September 17-18 FOMC meeting,” said Credit Suisse chief economist Neal Soss in a recent note to clients. “The reason is the calendar. If FOMC policymakers don’t begin tapering this month, the next opportunities are their October 29-30 and December 17-18 FOMC meetings. October is likely to be right in the middle of the debt ceiling fight. In general, people think these fights will end without tearing the fabric apart, but then again, nearly everyone expects a heightened degree of contention and disharmony. Also, President Obama may announce a nominee for Bernanke’s successor in mid-to-late October. This would not be an ideal moment for the central bank to experiment with a potentially disruptive operational change. ”
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