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* Energy shares drop as oil prices slide
* Saudi Arabia says to restore output this month
* Home Depot drops after Guggenheim downgrade
* Indexes close: Dow +0.12%, S&P 500 +0.26%, Nasdaq +0.40%
(Updates to close)
By Noel Randewich
Sept 17 (Reuters) - Wall Street ended higher on Tuesday as
the impact of weekend attacks on Saudi Arabia's biggest oil
refinery faded and investors awaited a widely expected Fed
interest rate cut on Wednesday.
Stocks closed firmly in positive territory after being mixed
for much of the session. That helped make up for a hit to Wall
Street on Monday after attacks wiped out nearly half of Saudi
Arabia's oil production, sending oil prices soaring and fuelling
geopolitical tensions.
The S&P 500 is less than 1% short of its record high close
on July 26.
Investors were calmed after U.S. President Donald Trump said
he did not want war and Saudi Arabia said it would restore its
lost output by the end of September. "People were thinking it would be months until we got that
production back on line, and now it seems more like weeks.
Putting that production back on line alleviates the risk of a
higher disruption," said Keith Buchanan, a portfolio manager at
GLOBALT Investments in Atlanta.
The S&P energy index .SPNY dipped 1.5% after recording its
strongest one-day surge since January on Monday. The so-called
defensive consumer staples .SPLRCS , utilities .SPLRCU and
real estate .SPLRCR posted some of the biggest gains among the
11 major S&P sectors.
Overall, nine sectors rose on Tuesday, with only energy and
industrials .SPLRCI ending lower.
The U.S. Federal Reserve concludes its two-day policy
meeting on Wednesday, where the central bank is expected to
lower interest rates by a quarter percentage point, the second
rate reduction of the year. Investors will also wait for clues on how far the U.S.
monetary policy easing would go, given that Fed policymakers are
deeply divided on whether more rate cuts are warranted.
"Its going to be difficult for them to signal an extremely
dovish tone, given they are already half divided at this point,"
said Chris Zaccarelli, chief investment officer at Independent
Advisor Alliance, in Charlotte, North Carolina.
The S&P 500 bank index .SPXBK , which tends to underperform
in a lower interest rate environment, fell 0.6%.
Economic reports were upbeat, as U.S. manufacturing output
increased more than expected in August, while homebuilders'
optimism crept up in September. The Dow Jones Industrial Average .DJI edged up 0.12% to
end at 27,109.03 points, while the S&P 500 .SPX gained 0.26%
to 3,005.61.
The Nasdaq Composite .IXIC added 0.4% to 8,186.02.
Among stocks, Chipotle Mexican Grill Inc CMG.N jumped 3.2%
as it added a new steak dish to its menu in the United States
for the first time in three years. Home Depot Inc HD.N dropped 0.3% after Guggenheim
downgraded the home improvement chain's shares to "neutral" from
"buy."
Corning Inc GLW.N slumped 6.1% after the Gorilla glass
maker cut its current-quarter display volume forecast.
Kraft Heinz Co KHC.O tumbled 4.3% after the packaged food
maker's second-largest investor, 3G Capital, sold over 25
million shares in open market at a discount.
Advancing issues outnumbered declining ones on the NYSE by a
1.17-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and 1 new low; the
Nasdaq Composite recorded 57 new highs and 29 new lows.
Volume on U.S. exchanges was 6.8 billion shares, about
average over the last 20 trading days.