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Stock closed higher after adventurous investors shook up a complacent market late in the day by seeking out attractively priced shares. Warner Music Group managed a strong rise, after making a new offer to buy British recording company EMI. However, EMI has rejected the Warner Music offer, and has issued its own bid to buy Warner Music. Investors look forward to the Federal Reserve policy statement tomorrow.

Today, the Dow Jones Industrial average closed up 48.82 or 0.45% to 10,973.56, the broader Standard & Poor’s 500 index closed up 6.80 or 0.55% to 1,246.00, and the Nasdaq composite index closed up 11.59 or 0.55% to 2,111.84.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of 19 to 12 on volume of 1.487 billion shares. On the Nasdaq, winners narrowly beat losers by 15 to 14as 1.637 billion shares changed hands.

Many investors looked for bargains in the hope that the anticipated 0.25% rate increase has already been factored in. It is evident that there is no movement in any direction - only individual stories and stocks. The market continues to struggle to understand policymakers’ monetary leanings under the leadership of new Chairman Ben Bernanke. There have been rumblings that the Fed could be more aggressive and raise by half a percentage point this time. The consensus is that the market already has forward-priced to adjust to the expected events. Investors will be focusing more on the Fed’s statement and looking for clues about what the central bank intends to do with interest rates in the months ahead.

On data news, there was slight reaction to news from the Mortgage Bankers Association that mortgage applications fell 6.7% last week. This counteracted the impression of a booming housing market suggested by a 4.6% surge in monthly new home sales earlier in the week, but investors suspected it would have little influence on the Fed decision. Investors also scrutinized news from the Energy Department that crude supplies fell a bigger-than-expected 3.4 million barrels in the latest week. There also was a drop in gasoline supplies.

Shares of Warner Music rose 3.2% to close at $28.11 after the company’s $4.6 billion bid for British music company EMI Group was rejected. Earlier in London trading, shares of EMI shot up 10% as the unusual tug-of-war takeover battle unfolded. EMI has also raised its offer for Warner Music to $4.6 billion, or $31 a share, a nearly 14% premium from Tuesday’s close.

Shares of General Motors closed up nearly 3% as the world’s largest automaker had tumbled 7% the previous session on concerns of lower industry wide sales. GM shares have put in the best performance of the 30 stocks in the Dow industrials this year, up 43% as of Monday’s close. The gain is prominently owing to reasons such as buyout option, reduced dividend, heath care costs and raising of cost cutting targets.

Shares of retailer J. Crew Group soared 27.8% up $5.42 to $25.55 to $25.42, in their market debut on the New York Stock Exchange. The stock debut price for the clothing retailer and catalog marketer was initially set in the $15 to $17 range.

Shares of Nike Inc. down $3.91 or 4.7% to $79.72, after the sneaker maker said its quarterly net income declined and profit margins fell below expectations. Heavy spending on the World Cup and other costs forced the company to miss quarterly earnings estimates.

Wendy’s International closed off 2.3%. at $56.41. The fast-food restaurant operator late Tuesday said that second-quarter earnings per share will fall due to charges from its early-retirement plan, job cuts and other cost-cutting moves.

In the tech sector, shares of Texas Instruments fell 2.3% to $28.96 as RF Micro Devices slid 4.3% to $5.76, after J.P. Morgan said there was downside risk for the earnings of the suppliers of components to Nokia. According to the brokerage, Nokia could push out orders for handset components to future quarters, which could pinch on current profits. Nokia’s U.S.-traded stock fell 2.4% to $19.13.

Crude for August delivery closed higher after news of the drop in weekly supply. The front-month contract closed at $72.19 a barrel, up 27 cents on the session on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter