Wall Street ends up on views Fed will hold off on rates

US stocks rose slightly on Tuesday, nudging the Nasdaq to a record high close, as economic data bolstered views the Federal Reserve may decide against raising interest rates in the near term.
The S&P financial index, which tends to rise with expectations for higher rates, slipped 0.2 percent, while the S&P utilities index, which tends to benefit from a lower rate environment, rose 1.1 percent.

A weaker-than-expected reading on the US services sector in August added to views the Fed will refrain from raising interest rates at its meeting this month.

The Fed is "not getting support from data for a rate increase, and so we're seeing the market creep a little higher today," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Stocks should benefit from a continued environment of low rates and the Fed on the sidelines as long as economic data doesn't show significant slowing, he said.

The chances of a rate hike in September dropped after the data, according to CME Group's FedWatch tool.

The Dow Jones industrial average closed up 46.16 points, or 0.25 percent, to 18,538.12, the S&P 500 gained 6.5 points, or 0.3 percent, to 2,186.48 and the Nasdaq Composite ended up 26.01 points, or 0.5 percent, at 5,275.91, a record high.

Though oil prices ended lower, the S&P 500's energy index rose 1.5 percent, helped by Enbridge's acquisition of Spectra Energy for about USD28 billion. Spectra jumped 13.4 percent to USD41.

Navistar gained 40.7 percent to USD19.79 after Volkswagen agreed to supply engines to the US truck maker in exchange for a 16.6-percent stake.

Other big gainers included Cepheid, which jumped 52.6 percent to USD52.53 after the diagnostics company agreed to be bought by Danaher for USD4 billion, including debt. Danaher's shares were down 2.1 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored advancers.

The S&P 500 posted 37 new 52-week highs and no new lows; the Nasdaq Composite recorded 168 new highs and 20 new lows.

About 6.6 billion shares changed hands on US exchanges, above the 6.0 billion daily average for the past 20 trading days, according to Thomson Reuters data.