June 18 - Summary: Stocks stage back-to-back rally as confidence grows in Fed buying; Inflation heats up a little; New home construction slower than thought; Icahn says found Dell financing; Sprint sues Dish. Conway G. Gittens reports.
Wall Street rallies for a second day and gains stay firm as the Federal Reserve begins a two-day policy meeting. The Dow had its first two-day triple-digit gain in more than a month and the rest of the market enjoys its strongest back-to-back gain in more than a week. The fate of the rally, however, may be determined by the person inside this SUV. Federal Reserve chairman Ben Bernanke -arriving for the first of a two day discussion on rates and bond buying. Anticipation is riding higher than normal as investors look for clues on when the Fed will begin rolling back stimulus. Glen Hubbard is a former White House economic advisor and is now a Dean at Columbia University. SOUNDBITE: GLENN HUBBARD, DEAN, COLUMBIA UNIVERSITY SCHOOL OF BUSINESS (ENGLISH) SAYING: "The Fed knows what to do, it has all the tools. But the question of timing of exit and the politics of exit are very real. Investors are quite right to be worried. And of course, there's uncertainty about the identity of the next Fed Chairman. All of that indicates a bumpy road." Positive economic signals heading into the meeting. Inflation is moving closer to the Fed's target of two percent. Consumer prices, excluding food and energy, up 1.7 percent in the 12 months to May. The gains were led by higher airfare costs and prices tied to the real estate revival. And speaking of real estate, new home construction rose 6.8 percent in May, which was not as robust as hoped, but not disappointing enough to cast doubt on the housing market's recovery. Updates on the latest corporate battles. Activist investor Carl Icahn says a major investment bank is willing to provide capital for his fight to keep Dell from going private. And in a complicated three-way saga: Sprint is suing Dish Network as the two go after wireless spectrum company Clearwire. The lawsuit filed Monday was one day before Dish faces a deadline to make a final offer for Sprint. In Europe, labor troubles for Amazon.com in Germany. Warehouse workers walking off the job for a second day. They say the Internet retailer is grossly underpaying them. As for market action, small gains in Germany and the U.K. but a small loss in France.