By Johann M Cherian and Purvi Agarwal
(Reuters) - Wall Street's main indexes inched higher on Tuesday, with mining stocks in the lead after China unveiled a sweeping stimulus package, while concerns of a weaker economy and uncertainty over the Federal Reserve's next policy move limited gains.
The indexes initially pared gains after a Conference Board report showed U.S. consumer confidence unexpectedly fell in September amid mounting worries over the health of the labor market.
Market pricing for the Fed's November decision now favors another 50 basis point cut, from a coin toss earlier, as per the CME Group's (NASDAQ:CME) FedWatch Tool.
"We got a little bit of cold water with the consumer confidence number this morning that might add to concerns the Fed may have been a little late," said Michael James, senior vice president of equity trading at Wedbush Securities.
The S&P 500 and the blue-chip Dow were hovering near record highs, and were set for monthly gains after the Fed's outsized rate cut sparked a market rally, and was backed by a number of Fed policymakers.
The Dow Jones Industrial Average rose 9.72 points, or 0.02%, to 42,134.37, the S&P 500 gained 6.16 points, or 0.12%, to 5,725.17 and the Nasdaq Composite gained 76.13 points, or 0.42%, to 18,050.40.
Six out of the 11 S&P 500 sectors trended downwards, although material stocks outperformed peers with a 1.1% rise.
Metal prices got a boost after the world's second-largest economy, China, unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk.
Copper and lithium miners rose. Freeport-McMoRan (NYSE:FCX) added 7%, Southern Copper rose 6.5%, Albemarle advanced 3% and Arcadium climbed 3.8%.
U.S.-listed shares of Chinese firms such as Alibaba (NYSE:BABA) rose 6.7%, PDD Holdings added 10.2% and Li Auto (NASDAQ:LI) advanced 8.4%, tracking gains in the domestic market.
"China's moves to stimulate their economy are going to add optimism to companies doing extensive business in China and you're seeing that reflected in some of those stocks," James said.
Megacap stocks were mixed, with Nvidia gaining 3.5%, while Microsoft (NASDAQ:MSFT) lost over 1%. The broader technology sector rose 0.9%.
The Philadelphia SE Semiconductor was up 1.7% as most chip stocks such as Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC) rose 1.8% each.
Meanwhile, Fed Governor Michelle Bowman cautioned that key inflation measures remained "uncomfortably above" the Fed's 2% target, warranting caution as the Fed proceeds with cutting interest rates.
For the week, weekly jobless claims and personal consumption expenditure data will remain in focus.
Among stocks, Visa (NYSE:V) lost 4% after a report showed the U.S. Department of Justice plans to file a lawsuit against the payments network operator, alleging that it illegally monopolized the country's debit card market.
It weighed on the financial sector that slipped 1%.
Advancing issues outnumbered decliners by a 1.38-to-1 ratio on the NYSE and by a 1.13-to-1 ratio on the Nasdaq.
The S&P 500 posted 52 new 52-week highs and no new lows, while the Nasdaq Composite recorded 76 new highs and 69 new lows.