* Fed suggests preparing to do more to help economy
* Homebuilders up after rise in August housing starts
* Indexes up: Dow 0.5 pct, S&P 0.3 pct, Nasdaq 0.2 pct
* For up-to-the-minute market news see []
(Updates with Fed comments, changes byline)
By Ryan Vlastelica
NEW YORK, Sept 21 (Reuters) - U.S. stocks turned positive
in volatile afternoon trading on Tuesday after the Federal
Reserve said it stood ready to provide additional support to
bolster a modest economic recovery.
While the central bank made no shift in monetary policy at
the end of a one-day meeting, it opened the door wider to
pumping more money into the economy. For details, see
[]
"This keeps the status quo and was exactly what the market
was looking for," said Steven Baffico, senior managing director
at Claymore Securities Inc in Lisle, Illinois. "We've been
getting some some encouraging data and stabilizing numbers, so
they were very careful to telegraph their message."
After the Fed's August meeting, the U.S. central bank
issued a bleak assessment of the economy and the S&P 500
tumbled more 4 percent over the next four days. Investors are
hoping that improved economic data since then will mean a more
upbeat outlook.
"Anything that would be dramatic by the Fed one way or the
other would be unsettling, and the market is looking for some
stability to move higher," said Ed Crotty, chief investment
officer at Davidson Investment Advisors in Great Falls,
Montana.
The Dow Jones industrial average <> was up 54.04
points, or 0.50 percent, at 10,807.66. The Standard & Poor's
500 Index <.SPX> was up 3.10 points, or 0.27 percent, at
1,145.81. The Nasdaq Composite Index <> was up 4.79
points, or 0.20 percent, at 2,360.62.
In Monday's session, the S&P 500 <.SPX> broke through a key
technical range to close at a four-month high. The index has
gained about 9 percent so far this month, but some analysts are
unconvinced by Monday's breakout above 1,130, the upper end of
a range that has persisted since June.
Sectors that had rallied recently, including technology and
materials shares, gave back some gains on Tuesday. Dow
component Microsoft Corp <MSFT.O> fell 0.6 percent to $25.27
while Alcoa Inc <AA.N> lost 1.8 percent to $11.18.
U.S. housing starts increased in August to their highest
level in four months, while permits for future construction
rose, suggesting the embattled housing market was starting to
stabilize. []
The Dow Jones home construction index <.DJUSHB> added 0.8
percent, and homebuilder D.R. Horton Inc <DHI.N> rose 0.9
percent at $11.14.
"It was very encouraging to see how strong the number was,
but much of the strength was in multifamily homes, and that
tends to be a volatile measure," Crotty said. "We want to see a
trend of positive numbers before we become more bullish on the
sector."
Airline shares rose, with the ARCA airline index <.XAL>
adding 2 percent and rising to a 34-month high. A trade group
forecast global airlines will likely post sharply higher 2010
profits. []
(Reporting by Ryan Vlastelica; Editing by Kenneth Barry)
