Stocks edge slightly higher
Investors await decision from Fed on how much it will raise interest rates
Stocks eked out modest gains after a choppy day of trading Tuesday as Wall Street waits to find out how aggressively the Federal Reserve will raise interest rates at its latest policy meeting on Wednesday.
The S&P 500 ended 0.5 percent higher after briefly slipping into the red earlier in the day. The Dow Jones Industrial Average rose 0.5 percent and the Nasdaq inched up 0.2 percent.
Banks and other financial stocks helped lift the market. Energy stocks also made solid gains following encouraging quarterly earnings reports from several oil and gas companies. Retailers and other companies that rely on direct consumer spending lagged the broader market.
Bond yields were mixed. The yield on the 10-year Treasury fell to 2.97 percent from 2.99 percent late Monday. Treasury yields have been generally rising all year as investors prepare for higher interest rates, which will make borrowing money more expensive.
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.
“Right now, the market wants to hear that the Fed is going to be ahead of inflation,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “What would spook the market is if there’s any hint of dovishness in their tone.”
The S&P 500 rose 20.10 points to 4,175.48. The Dow gained 67.29 points to 33,128.79. The Nasdaq rose 27.74 points to
12,563.76.
Technology stocks held on to slight gains after a mixed morning. Many companies in the sector have pricey stock values and therefore have more force in pushing the major indexes up or down. Apple rose 1 percent.
The Russell 2000 added 15.94 points, or 0.9 percent, to 1,898.86.
The market’s moderate gains follow a late-day rally on Monday that gave indexes a positive start to May after a brutal April.
“The rally in stocks yesterday and today is just positioning and squaring ahead of the Fed’s
meeting tomorrow,” said Zach Hill, head of portfolio management at Horizon Investments.
Wall Street’s key focus over the next several days is the Fed. The central bank will release a statement on Wednesday. Investors expect it 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. 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.