Stocks rise amid German bailout ruling, Fed stimulus bets

The pending announcement by the Federal Reserve about the economy and interest rates kept stock prices in a narrow range on Wednesday.

The Dow Jones Industrial Average gained 9.99 points to 13,333.35. The Nasdaq Composite Index rose 9.78 points to 3,114.31 and the S&P 500 Stock Index was up 3.00 points to 1,436.56.

The central bank will announce the results of a two-day meeting Thursday morning followed by a press conference with Chairman Ben Bernanke. It is widely anticipated the Fed will extend some form of quantitative easing to keep interest rates low.

The markets got a boost from Apple Inc. (Nasdaq: AAPL). The stock rose $9.20 to $669.79 after the company unveiled its new iPhone 5. The device will be lighter and have a larger video screen.

Commodities were little changed. Despite the situation in Libya oil dropped 16 cents to $87.01 a barrel and gold fell $1.20 to $1,733.70 an ounce.

“All eyes are expecting some sort of quantitative easing,” Joseph Tanious, a N.Y.-based strategist at JPMorgan Funds, which oversees $394 billion, said in a telephone interview. “Central bank accommodation has been what’s helped propel this market higher.” He said, “The tail risk is being eliminated in Europe. Getting the ruling from the German Constitutional Court reinforces that we’re stepping in the right direction.”

Chairman Ben S. Bernanke and his colleagues on the Federal Open Market Committee will opt for further quantitative easing to support an economy that grew at less than 2 percent in the second quarter, according to economists. The unemployment rate has remained above 8 percent for 43 consecutive months. Since Aug. 1, the S&P 500 has climbed more than 4 percent amid expectations of further easing by the central bank.

“Bernanke has adopted a very important guideline, and that is if he’s going to be wrong in the next two or three years, it’s because he kept rates too low for too long,” John Manley, who helps oversee about $204 billion as chief equity strategist for Wells Fargo Advantage Funds in New York, said in a telephone interview. “You want to err on the side of the angels, and I think he feels the angels are saying pay low rates in interest at this time.”

Stocks rose earlier as Germany’s Federal Constitutional Court dismissed motions that sought to stop the government from contributing to the rescue facility known as the European Stability Mechanism. The legal challenge delayed efforts by Chancellor Angela Merkel and other euro-area policy makers to stem the region’s debt crisis. The judges ruled that parliament must approve any increase of the country’s 190 billion euros ($245 billion) of liabilities.

The S&P 500 briefly extended gains after Bloomberg News reported France is pressing Spain to snub German concerns and request help from the European Union to contain the euro-area financial crisis, according to three people familiar with negotiations.

Telephone, industrial and financial stocks led gains among 10 groups in the S&P 500 Wednesday. General Electric Co. (NYSE: GE) added 1.4 percent to $21.89, the highest since October 2008. JPMorgan Chase & Co. (NYSE: JPM), the largest U.S. bank by assets, advanced 0.8 percent to $39.92, while property and casualty insurer Travelers Cos. (NYSE: TRV) climbed 0.9 percent to a record $67.54.

PulteGroup Inc. (NYSE: PHM) rallied 6 percent to $15.55 for the second- biggest gain in the S&P 500. Ten of 11 companies in the S&P Supercomposite Homebuilding Index rallied as Credit Suisse Group AG’s (NYSE: CS) August survey of real estate agents showed momentum in prices is continuing and Goldman Sachs Group Inc.’s (NYSE: GS) Hui Shan wrote in a note that housing starts are showing signs of improvement after staying at depressed levels since 2009.