Dollar gains as stocks, Treasuries fluctuate before Fed decision

The dollar gained, while U.S. stocks fluctuated and Treasuries pared an advance, as investors awaited tomorrow’s Federal Reserve statement for clues to the central bank’s bond-buying plans. Australia’s dollar fell as the central bank indicated it may lower interest rates.

The Bloomberg Dollar Index, a gauge of the currency against 10 major peers, jumped 0.3% to 1,026.85 as of 3:19 p.m. in New York. The S&P 500 added 0.1% to 1,687.32 and is up 5% in July, its biggest monthly gain since January. Ten- year Treasury yields were little changed at 2.60% after losing three basis points earlier. The Aussie weakened at least 0.6% against its 16 major peers, tumbling 1.6% versus its U.S. counterpart. The S&P GSCI gauge of 24 raw materials slipped 0.9% for a fifth straight drop as metals led losses.

Goodyear Tire & Rubber Co. and Pitney Bowes Inc. jumped more than 9% to lead the S&P 500 to an earlier gain of as much as 0.5% after earnings beat estimates. Reserve Bank of Australia Governor Glenn Stevens said inflation data leave room for rate cuts as central banks in the U.S., Europe and the U.K. meet this week. American consumer confidence weakened in July while a gauge of U.S. home prices rose the most in more than seven years, economic reports showed today.

“We’re waiting again to hear what the Fed has to say because everybody’s on tenterhooks,” Sarah Hunt, an associate fund manager and analyst who helps oversee $4.5 billion at Purchase, New York-based Alpine Woods Capital Investors LLC, said in a phone interview.

Fed Meeting

The Federal Open Market Committee, which has said it may start paring stimulus should the U.S. economy meet the central bank’s forecasts, starts a two-day meeting today. The Fed will probably maintain its benchmark interest rate at 0.25%, economists predict. Policy makers will begin to reduce the central bank’s bond-purchase program in September, a Bloomberg survey of economists shows. A government report tomorrow is forecast by economists to show that growth in U.S. gross domestic product slowed to 1% in the second quarter from 1.8% in the first three months of the year.

The S&P 500 has advanced this month as companies from Apple Inc. to Visa Inc. reported better-than-estimated earnings. Of the 302 companies in the S&P 500 that posted quarterly results so far in the reporting season, 73% have exceeded analysts’ estimates for profit and 55% have topped sales projections, data compiled by Bloomberg show.

Eastman Chemical Co. gained 7.5% after raising its full-year profit forecast. Pfizer Inc. reported second-quarter profit that beat analysts’ estimates, sending the shares up 0.6%.

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