US stocks gained ground on Tuesday as oil prices extended declines, while investor focus was squarely on the Federal Reserve’s two-day meeting where policymakers are widely expected to raise interest rates.
Nine of the 11 major S&P sectors advanced in early trading, with technology and consumer discretionary stocks climbing the most.
Microsoft Corp and Broadcom Inc gained 1.6% and 3.9%, respectively, providing the biggest boost to the S&P 500 and the Nasdaq.
Big banks, which tend to benefit from rising interest rates, rose. JPMorgan Chase & Co advanced 1.4%.
Delta Air Lines Inc and United Airlines jumped nearly 9% after the US carriers raised their current-quarter revenue forecasts, even as they trimmed capacity.
US producer prices increase strongly in February
Traders see a 91% chance of a 25 basis point rate hike by the US central bank at the conclusion of its meet on Wednesday. However, focus likely will be on projections showing just how far policymakers think rates will need to rise this year and in 2023 and 2024 to tame inflation.
“We’ve been talking about the interest rate hikes for about a year now. So, to finally get it tomorrow and to put it in the rear-view mirror would be a good thing for the market,” said Christopher Grisanti, chief equity strategist at MAI Capital Management in New York.
“There’s space for the Federal Reserve to say yes, we’re worried about inflation, but we’re going to watch carefully and language like that would also be bullish.”
Data on Tuesday showed US producer prices rose solidly in February, and further gains are likely from higher prices of crude oil and other commodities following Russia’s invasion of Ukraine.
At 10:04 a.m. ET, the Dow Jones Industrial Average was up 247.38 points, or 0.75%, at 33,192.62, the S&P 500 was up 39.26 points, or 0.94%, at 4,212.37, and the Nasdaq Composite was up 148.51 points, or 1.18%, at 12,729.73.
Meanwhile, a steep jump in daily COVID-19 infections in China, along with a lack of progress in Ukraine-Russia talks to end their weeks-long conflict weighed on sentiment.
Talks discussing a ceasefire and a withdrawal of Russian troops from Ukraine resumed, one of Ukraine’s negotiators said on Tuesday.
Energy shares slid, with Chevron Corp down 6.1%. Crude prices slid to $100 a barrel as fresh COVID curbs in China weighed on demand outlook, after scaling as much as $139 last week on fears of supply disruptions following Western sanctions on Russian oil.
“There is some good news. Oil is down a lot today, but I don’t think the market will get any longer-term direction until there’s some clarity on the Ukrainian invasion and how that’s going to play itself out,” Grisanti added.
The CBOE volatility index, also known as Wall Street’s fear gauge, slipped but held above 30 points.
Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and a 1.59-to-1 ratio on the Nasdaq.
The S&P index recorded 9 new 52-week highs and six new lows, while the Nasdaq recorded 11 new highs and 241 new lows.
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