U.S. Stocks Up Before Fed Minutes, Alcoa Report

NEW YORK (MarketWatch) -- U.S. stocks posted modest gains Tuesday, with investors looking to commentary from the Federal Reserve's September policy meeting for clues to future moves and post-close financial results from blue-chip aluminum producer Alcoa Inc.

The Dow Jones Industrial Average climbed 14.9 points to 14,058.5, with 27 of its 30 components ahead, led the likes of Exxon Mobil Corp. , up 1.5%, and Microsoft Corp. , up 1.2%.

The S&P 500 rose 1.71 points to 1,554.29, while the Nasdaq Composite gained 2.12 points to 2,789.49.

Technology stocks were largely ahead, as Web search giant Google Inc. continued to gain after setting an all-time high on Monday. Google stock was up 0.4% at $611.87 after Lehman Brothers raises its price target on Google to $714 a share. .

Telecommunications stocks mostly retreated, with Sprint Nextel Corp. shares down 1.3% after word late Monday that the telecommunications giant's CEO had stepped down. .

Under fire amid subscriber defections and disappointing share-price performance, the Sprint executive's exit wasn't entirely unexpected.

Nearly 550 million shares were traded on the New York Stock Exchange, with advancing stocks outpacing declining issues roughly 9 to 7. On the Nasdaq, 996 million shares exchanged hands, and declining issues edged just ahead of advancing stocks.

In trade thinned by the Columbus Day holiday, U.S. stocks on Monday ended mixed to mostly lower.

"This market could be headed for a short-term correction of 3% to 5% as earnings begin to flow," said Peter Cardillo, chief market economist at Avalon Partners. .

Crude advance

Crude oil futures reversed early losses on Tuesday, with traders waiting for a report expected to show tight inventories for heating oil. Crude for November delivery was up $1.68 at $80.70 a barrel.

Gold futures gained, with the contract for December delivery up $5.10 to $743.80.

The dollar was slightly lower against major counterparts, with the dollar index, which measures the U.S. currency against a basket of major currencies, at 78.750, compared with 78.775 in late U.S. trading Monday. .

Minutes ahead

At 2 p.m. Eastern time, the Fed's slated to release the minutes from its gathering Sept. 18, when central bankers cut U.S. interest rates by half a percentage point.

"Focus remains on the FOMC [Federal Open Markets Committee] minutes for both the Aug. 16 and Sept. 18 policy actions, especially since the upward payrolls revisions have shed a very different light on the deeper-than-expected rate cuts in late September," said analysts at Action Economics.

"The minutes from the Sept. 18 meeting should provide further guidance on the outlook for Fed policy. In particular, we look for hints of 'silent' dissents from the hawkish regional bank presidents, but also text stressing additional cuts will be contingent on further weakness in the incoming data," said Lehman Brothers analyst Zach Pandl.

Financial markets are increasingly convinced the Fed won't cut its overnight interest rate target later this month. According to prices in the Chicago Board of Trade's federal funds futures market, the implied odds of an October rate cut on Tuesday fell from 48% to 38%. The market still expects the Fed to cut its target to 4.50% in December. Two influential Fed bank presidents -- William Poole and Janet Yellen -- are speaking later in the day.

In play

And in the unofficial start of third-quarter earnings season, Dow component Alcoa is expected to report a profit of 65 cents a share for the third quarter, according to the average estimate of analysts who follow the aluminum producer. This would be up about 5% from the year-ago period.

Already out with results, Mosaic Co. reported first-quarter profits of 69 cents a share, topping forecasts calling for 58 cents a share. Its stock rose 7.9%.

Shares of Yum Brands Inc were up 4.9% after the fast-food restaurant giant reported a better than expected third-quarter profit after Monday's close.

American Electric Power Company Inc. advanced 0.3% after the Columbus, Ohio-based utility agreed to pay more than $1 billion to settle a federal lawsuit tied to emissions from its coal-fired power plants. .

On the broker front, Deutsche Bank downgraded Dow component Coca-Cola Co. to hold from buy, citing valuation. Shares of Coca-Cola slid 0.1%.

JetBlue Airways Corp. also drew a downgrade, with Goldman Sachs cutting its rating to neutral from buy. Shares of JetBlue were off 0.8%.

Gains overseas

In Asia, a handful of stock indexes in the region ended at record highs. .

In Europe, shares tallied broad-based gains, paced by London. See .

By Kate Gibson