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Stocks keep rising before Fed news

David Russell (david.russell@optionmonster.com)

Stocks are inching higher before the Federal Reserve's monetary announcement today and as investors hope for a "fiscal cliff" resolution in Washington.

S&P 500 futures have gained in the last hour and are now up about a quarter percent, following similar advances in Europe. Most Asian markets rose by more than half a percent in the overnight session amid continued optimism about the global economy.

On one hand, there are concerns that the United States could face sharp tax hikes and spending cuts at year's end. But on the other, the housing market is improving, Europe continues to work through its sovereign-debt crisis, and China is starting to show signs of acceleration.

The Fed will wade into this environment today at 12:30 p.m. ET. While it is a near-certainty that the overnight lending rate will remain unchanged near zero percent, the big question is how aggressively the central bank will buy bonds to prop up asset prices. Fed Chairman
Ben Bernanke will follow the statement with a press conference at 2:15 p.m. ET.

Commodity and foreign-exchange markets are also sounding and optimistic tone before the news. Oil is higher by almost a full percentage point, while gold, copper, and silver are up by about half a percent.

The euro, Australian dollar and Canadian dollar are higher as well, a sign a risk appetite, while the safe-haven Japanese yen continues to fall. Most agricultural foodstuffs are lower.

In company-specific news, Clearwire could be active amid reports that Sprint Nextel wants to buy out minority investors and take full ownership of the broadband carrier. Costco is also pushing higher after its first-quarter results beat estimates.

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