A choppy day of trading on Wall Street ended with stocks closing higher on Monday as investors brace for another big interest rate hike this week from the Federal Reserve.
The indices oscillated between modest gains and losses for much of the day before a burst of buying in the final hour of trading. The S&P 500 rose 0.7%, rebounding from a 0.9% decline. The Dow Jones Industrial Average rose 0.6% and the Nasdaq composite climbed 0.8%.
Tech stocks, retailers, banks and industrial companies helped boost the market. Apple rose 2.5%, Home Depot gained 1.6%, Bank of America rose 1.7% and United Airlines closed up 3.3%.
Health care and real estate stocks fell, tempering gains elsewhere in the market. Pfizer fell 1.3% and Welltower 2.2%.
The 2-year Treasury yield, which tends to track Fed action expectations, rose to 3.94% from 3.87% late Friday. The 10-year yield, which influences mortgage rates, rose from 3.45% to 3.49%.
Small company stocks also gained ground. The Russell 2000 closed up 0.8%.
Trading volume was below normal, a sign that most traders weren’t keen on making big changes ahead of the Federal Reserve’s interest rate policy announcement on Wednesday afternoon, it said. Scott Ladner, Chief Investment Officer at Horizon Investments.
“Nobody really wants to position themselves in front,” he said. “It’s been such a slippery market both up and down.”
The S&P 500 rose 26.56 points to 3,899.89, while the Dow Jones added 197.26 points to 31,019.68. The Nasdaq rose 86.62 points to 11,535.02 and the Russell 2000 added 14.65 points to 1,812.84.
Wall Street remains focused on inflation and the Federal Reserve’s attempt to drive prices down by aggressively raising interest rates. On Wednesday, the central bank will announce its latest rate decision. It is expected to raise its benchmark rate, which influences interest rates across the economy, by another three-quarters of a percentage point.
The broader market is coming off its worst week in three months following a surprisingly hot report on inflation and major companies, including FedEx, warning of deteriorating trends in the economy.
Wall Street fears that the Fed’s plan to quell the highest inflation in four decades is too aggressive and could plunge the economy into a recession by dampening growth too hard. Higher rates also tend to weigh on equities, especially the more expensive tech sector.
Investors will get another update on the housing sector on Wednesday when the National Association of Realtors releases August numbers for sales of previously occupied homes.
Average long-term mortgage rates in the United States rose above 6% last week for the first time since the housing crash of 2008. These higher rates could make an already tight housing market even more expensive for American buyers.
Britain observed a day of mourning for Queen Elizabeth II. The German DAX rose 0.5% while the CAC 40 in Paris fell 0.3%. Hong Kong’s Hang Seng lost 1% while the Shanghai Composite lost 0.3%. Japanese markets were closed for a holiday.