U.S. stocks rose on Tuesday, bolstered by a spate of mergers and acquisitions, while bonds were little changed before key economic data and the dollar rose against the Japanese yen, according to Reuters. Grabbing attention of all markets was a looming decision by the Bank of Japan on whether to raise interest rates, now the lowest in the industrialized world. "The BOJ meeting could potentially create some volatility," said Sam Rahman, portfolio manager at Baring Asset Management Inc. in Boston. "If the BOJ raised interest rates, that would be a negative." Low Japanese interest rates have given a lift to the dollar, U.S. stocks and bonds by making it cheap for investors to borrow to buy dollar-denominated assets. Investors are split on whether the BOJ will raise rates by 0.25 percent to a decade high of 0.5 percent. Whatever the BOJ's decision, however, more investors were convinced that the yen would remain popular to fund the carry-trade in which it is sold to buy higher-yielding currencies. That view helped the dollar rise to 120.06 yen, moving further away from the six-week low of 118.96 set last week. "A rate hike may not be compelling enough reason to trigger a sharp unwinding of carry trades, so the yen is mostly likely to remain vulnerable," said Alex Buezelin, senior market analyst at Ruesch International in Washington D.C. The Dow Jones industrial average was up 11.38 points, or 0.09 percent, at 12,778.95. The Standard & Poor's 500 Index was up 2.55 points, or 0.18 percent, at 1,458.09. The Nasdaq Composite Index was up 9.89 points, or 0.40 percent, at 2,506.20. WAL-MART RESULTS HELP STOCKS Stronger-than-expected profit at Wal-Mart Stores Inc., the world's biggest retailer, also helped to lift stocks. Wal-Mart's shares rose nearly 3 percent to $49.91 on the New York Stock Exchange. Falling oil prices and expectations for reduced demand for U.S. heating oil weighed on energy stocks such as Exxon Mobil Corp., which dropped 0.64 percent to $74.81. Heating oil demand in the United States is likely to ease over the next weeks as the northern winter reaches an end, pressuring prices. Crude prices have remained in a $57 to $60 a barrel range for the past three weeks despite tensions over the nuclear program in Iran, the world's fourth biggest exporter. U.S. crude prices were down $1.48 at $57.92. News of major deals, including Sirius Satellite Radio's plan to buy rival XM Satellite Radio helped to boost stocks. Treasury prices were little changed before Wednesday's release of the January U.S. Consumer Price Index and minutes from the Federal Reserve's Jan. 31 meeting. The benchmark 10-year U.S. Treasury note was unchanged, with the yield at 4.688 percent. The 2-year U.S. Treasury note was also unchanged, yielding 4.844 percent. The 30-year U.S. Treasury bond was up 4/32, with the yield at 4.782 percent. In currencies, the dollar was up against a basket of major currencies, with the U.S. Dollar Index up 0.21 percent at 84.20 from a previous session close of 84.020. The euro was down 0.13 percent at $1.3136 from a previous session close of $1.3153. The dollar was up 0.44 percent against the Japanese yen JPY= at 120.06 from a previous session close of 119.54. "It looks like the BOJ will raise rates tomorrow, but that is very finely balanced," said Barclays Capital currency strategist Adarsh Sinha. "If they raise rates by 25 basis points it's not going to affect the relative attractiveness of foreign assets (for Japanese investors)." Euro zone government bonds eased on technical factors while traders waited for the Bank of Japan decision and eyed the shrinking U.S.-euro zone yield spread. The 10-year Bund yield EU10YT=RR was 1.14 basis points higher at 4.081. European shares fell, slipping off 6 year highs reached in the previous session after disappointing earnings and as energy shares weakened. The pan-European FTSEurofirst 300 index fell 0.32 percent to 1,544.99 points. Japan's broadest stocks index, the TOPIX hit a 15-year peak of 1,784.20 before closing marginally higher, but investors there were generally wary ahead of the rates decision. The main Nikkei average, which scaled a near-seven-year high on Monday, closed a whisker down at 17,939.12.
