Stocks edge higher ahead of Fed action

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 policy meeting Wednesday.

The Standard & Poor’s 500 ended 0.5% higher after briefly slipping into the red earlier in the day. The Dow Jones industrial average rose 0.2% and the Nasdaq also inched up 0.2%.

Banks and other financial stocks helped lift the market. Energy stocks also made solid gains after encouraging quarterly earnings reports from several oil and gas companies. Retailers and other companies that rely on direct consumer spending lagged behind the broader market.

Bond yields were mixed. The yield on the 10-year Treasury fell to 2.97% from 2.99% late Monday.

Wall Street’s key focus over the next several days is the Fed. The central bank met Tuesday and will release a statement Wednesday. The Fed is expected to raise its benchmark rate by twice the usual amount this week as it steps up its fight against inflation.

“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 end at 33,128.79. The Nasdaq rose 27.74 points to 12,563.76.

Technology stocks held on to slight gains after a mixed morning. Apple rose 1%.

Smaller-company stocks outpaced the broader market. The Russell 2000 advanced 15.95 points, or 0.9%, to 1,898.86.

The market’s moderate gains follow a late-day rally Monday that gave indexes a positive start to May after a brutal April.

Investors have been closely reviewing the latest round of company earnings reports.

Household goods giant Clorox rose 3% after reporting solid quarterly profits, but it also cut its profit forecast for the year because of higher costs. CVS Health will report its financial results Wednesday.

BP jumped 8% after reporting its highest quarterly profit in more than a decade. Devon Energy rose 10.2% and Diamondback Energy gained 6.8% after they reported strong financial results.

Investors are getting some updates on the labor market. The Bureau of Labor Statistics reported Tuesday that employers posted a record 11.5 million job openings in March, meaning the United States now has an unprecedented two job openings for every person who is unemployed.

On Friday, the Labor Department is expected to report that the economy added 396,000 jobs in April, according to FactSet.