Financial Markets                      09/16 15:28

   

   NEW YORK (AP) -- The Dow Jones Industrial Average set a record after a quiet 
Monday of trading, as Wall Street geared up for the most anticipated meeting of 
the Federal Reserve in years.

   The Dow rose 228 points, or 0.6%, to surpass its prior all-time high set a 
few weeks ago. The S&P 500 index, which is much more comprehensive and widely 
followed on Wall Street, ticked up by 0.1% to climb within 0.6% of its own 
record set in July.

   The Nasdaq composite slipped 0.5% as big technology stocks and other market 
superstars gave back a bit of their big gains from recent years.

   Most stocks rose on Wall Street, and Oracle's gain of 5.1% helped lead the 
market. The software company continued a strong run that began last week with a 
better-than-expected profit report.

   Alcoa also jumped 6.1% after saying it would sell its ownership stake in a 
Saudi Arabian joint venture to Saudi Arabian Mining Co. for $950 million in 
stock and $150 million in cash. But drops for some influential Big Tech stocks 
kept indexes in check, including declines of 2.8% for Apple and 1.9% for 
Nvidia. They're among the market's most influential stocks because they're 
among the largest by market value.

   Stock indexes have been taking a jagged, scary ride toward their records. 
After worries about the U.S. economy and other hiccups in global markets 
briefly sent the S&P 500 nearly 10% below its all-time high last month, the S&P 
500 is just one middling day away from its record on excitement about coming 
cuts to interest rates.

   Treasury yields eased in the bond market ahead of Wednesday's meeting for 
the Federal Reserve, where it's expected to cut its main interest rate for the 
first time in more than four years.

   The only question is by how much relief for the economy the Fed will 
deliver. Traders are shifting more bets toward a larger-than-usual move of half 
a percentage point, according to data from CME Group. They're anticipating a 
63% chance the Fed will go beyond the traditional cut of a quarter of a 
percentage point. That's up from 50% on Friday and just 30% a week ago.

   The difference between a half-point cut and a quarter may sound academic, 
but it can have far-ranging effects. Lowering rates relieves pressure on the 
economy, but it can also give inflation more fuel.

   The Federal Reserve has been keeping its main interest rate at a two-decade 
high in hopes of slowing the economy enough to stifle high inflation. With 
inflation having eased substantially from its peak two summers ago, the Fed has 
said it can turn more focus to bolstering the slowing job market and economy. 
Some critics say it may be moving too late, increasing the risk of a possible 
recession.

   A Fed cut of half a percentage point would likely be the best case for the 
stock market in the very short term, according to Michael Wilson and other 
strategists at Morgan Stanley. But that's only if the Fed can convince 
investors it's not getting forced into a bigger-than-usual cut because of 
worries about a recession, among other factors.

   The more important thing over the next three to six months will be how well 
the job market holds up, according to Wilson. If employment weakens, stocks 
could fall regardless of whether the Fed cuts by half or a quarter of a 
percentage point on Wednesday.

   In the bond market, the yield on the 10-year Treasury fell to 3.62% from 
3.66% late Friday. The two-year yield, which moves more closely with 
expectations for the Fed, eased to 3.56% from 3.59%.

   That was despite a report in the morning showing manufacturing in New York 
state returned to growth. That surprised economists, who were expecting another 
month of contraction for an area of the economy that's been hit hard by high 
interest rates.

   On Wall Street, Carl Icahn's Icahn Enterprises rose 14.5% after it said a 
U.S. judge dismissed a proposed class-action lawsuit against the company, one 
based on allegations by a research firm that looks for financial irregularities 
at companies and tries to profit when the stock prices fall.

   Fertilizer producer Mosaic fell 3.6% after it said electrical equipment 
failures at mines and Hurricane Francine will reduce its production of potash 
and phosphate in the current quarter.

   All told, the S&P 500 rose 7.07 points to 5,633.09. The Dow added 228.30 to 
41,622.08, and the Nasdaq composite fell 91.85 to 17,592.13.

   In stock markets abroad, indexes were mixed amid mostly modest movements 
across Europe and Asia. Hong Kong's Hang Seng added 0.3% after data released 
over the weekend showed China's economy slowed further in August.

   Markets in Japan, mainland China and South Korea were closed for holidays.

   ___

   AP Writers Matt Ott and Zimo Zhong contributed.

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