Stock closed modestly higher on Wall Street Tuesday as investors await Wednesday’s decision by the Federal Reserve on interest rates. The S&P 500 rose 20.10 points, or 0.5%, to 4,175.48. The Dow Jones Industrial Average rose 67.29 points, or 0.2%, to 33,128.79. The Nasdaq rose 27.74 points, or 0.2%, to 12,563.76. The Fed is expected to raise its benchmark rate by twice the usual amount this week as it steps up its fight against inflation, which is at a four-decade high, the AP reports. Banks and other financial stocks helped lift the market.
Technology stocks held on to slight gains after a mixed morning. The moderate gains follow a late-day rally on Monday that gave indexes a positive start to May after a brutal April. Energy stocks made solid gains following encouraging earnings reports from several oil and gas companies. BP jumped 7.5% after reporting its highest quarterly profit in more than a decade thanks to surging oil and gas prices. Devon Energy rose 9.9% and Diamondback Energy gained 6.8% after they reported strong financial results.
"The rally in stocks yesterday and today is just positioning and squaring ahead of the Fed's meeting," says Zach Hill, head of portfolio management at Horizon Investment. Wall Street's key focus over the next several days is the Fed. The central bank is meeting on Tuesday and will release a statement on Wednesday. It has already raised its key overnight rate once, the first such increase since 2018, and Wall Street is expecting several big increases over the coming months. The Fed's aggressive shift to raise interest rates comes as rising inflation puts more pressure on businesses and consumers. (Read more stock market stories.)