NEW YORK (AP) — Stocks were modestly higher in early trading on Wall Street Wednesday as the Federal Reserve ends its last two-day policy meeting of 2013. Homebuilder stocks rose sharply after the government reported that construction of new homes surged in November.
KEEPING SCORE: The Dow Jones industrial average was up 52 points, or 0.3 percent, to 15,927 in the first 20 minutes of trading. The Standard & Poor's 500 index gained 4 points, or 0.2 percent, to 1,785 and the Nasdaq composite was up 5 points, or 0.1 percent, to 4,029.
FED DAY: Policymakers at the Federal Reserve will vote Wednesday on whether to keep up the bank's economic stimulus program. The central bank has been buying $85 billion in bonds a month in an effort to keep interest rates low and stimulate the economy. Investors widely expect the Fed will wind down the program within the next year. Few expect the Fed would do it this week with the end of the year approaching and most of the country heading on vacation in the next two weeks. Many economists expect that the pullback on the Fed's stimulus program is likely to come in March.
JOBS v. INFLATION: The final monthly U.S. jobs report of 2013 was huge. Unemployment fell to 7 percent in November, the lowest in five years, and employers added 203,000 jobs. But inflation remains historically low and well under the Fed's 2 percent target rate. That means consumers and businesses are not spending, and that is making Fed officials cautious about pulling back on its huge bond purchases, which have kept financial markets flush with cash.
BUILDING BLOCKS: Markets are also reacting to good news on the housing front. The Commerce Department says builders broke ground on homes at the fastest pace in more than five years and 23 percent more than in October. Permits for single-family homes rose, indicating that builders are increasingly confident in the market. The homebuilder Lennar surprised Wall Street by reporting a 32 percent profit spike for the fourth quarter. The stock jumped $1.32, or 4 percent, to $36.52.
NOT SO FORD TOUGH: Ford slumped 90 cents, or 6 percent, to $15.81 after the company issued a three-year profit forecast that came in short of investors' expectations. The company cited a large number of vehicle launches in 2014 as well as weakness in overseas markets. General Motors lost 76 cents, or 2 percent, to $40.76.
OVERSEAS: Investors were encouraged by signs the Germany economy is gaining momentum. Germany's DAX rose 1.1 percent to 9,181, France's CAC-40 rose 1 percent to 4,107 and the Britain's FTSE climbed 0.3 percent to 6,503.