MARKET SNAPSHOT: U.S. Stocks Inch Higher; FOMC In Focus

By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks staged a rebound in early trade Tuesday as investors shrugged off concerns over sectarian conflict in Iraq and disappointing government data on inflation and housing.

The S&P 500 (SPX) was 3 points, or 0.2%, higher at 1,940.66. The Dow Jones Industrial Average (DJI) added 25 points, or 0.2%, to 16,807.85.

The Nasdaq Composite (RIXF) outperformed other benchmarks, adding 20 points or 0.5%, to 4,340.60.

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In economic news, U.S. consumer prices rose sharply in May for the second straight month, prompting fears that the Federal Reserve may begin tightening the monetary policy sooner than the markets are expecting.

Construction on new U.S. homes fell by 6.5% in May and builders trimmed plans for future projects in another sign that a hoped-for spring revival in the housing market remains elusive.

Officials at the Federal Open Markets Committee began their two-day policy-setting meeting. Read: Fed mulling exit fees on bond funds: report.

Nuance Communications Inc. (SSFT) shares climbed 1.3% after reports on Monday that the speech-recognition software maker had held talks with suitors, including Samsung Electronics Co. and private equity funds. Nuance shares are up over 27% this year so far.

Tesla Motors Inc. (TSLA) shares rose 2.2% building on an 8.8% gain in the previous session over reports about a possible collaboration with its competitors. Tesla shares have climbed 53% year to date.

Shares of Gentiva Health Services Inc. (GTIV) rallied 3.9% after Kindred Healthcare Inc. (KND) sweetened its bid for the home-health and hospice company.

Oil prices, indeed were pushing lower, with August Brent and July WTI crude oil (CLN4) each down around 0.6%. U.S. President Barack Obama said he would deploy up to 275 troops to Iraq to "provide support and security" for U.S. staff and the U.S. Embassy in Baghdad, amid unrest in the country. He informed Congress of the decision in a letter sent Monday to House and Senate leaders John Boehner and Patrick Leahy.

European stocks gave up gains and were edging lower after the economic reports in the U.S.

Gold for August delivery (GCQ4) fell over $10, along with oil prices. The pound fell against the dollar (GBPUSD) after annual inflation in the U.K. slowed to its lowest rate in almost five years, easing pressure on the Bank of England to hike rates.

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