Stocks pull ahead in the final hour as investors brace for Fed decision.
The U.S. stock market rose on Tuesday, reversing earlier losses as attention shifted to the Federal Reserve and monetary policy.
Wall Street’s major indices flipped green in the final hour of trading. The Dow Jones Industrial Average (NYSEARCA:DIA) gained 32.31 points, or 0.1%, to 27,109.03.
The broad S&P 500 Index (NYSEARCA:SPY) drifted between gains and losses before eventually settling up 0.3% at 3,005.64. Nine of 11 primary sectors reported gains, led by real estate.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) climbed 0.4% to settle at 8,186.02.
A measure of 30-day volatility known as the CBOE VIX (NYSEARCA:VXX) traded virtually flat for most of the day, reflecting tepid trading conditions in the stock market. The so-called “fear index” settled down 1.3% at 14.48 on a scale of 1-100 where 20 represents the historic average.
The Federal Open Market Committee (FOMC) kicked off its two-day policy meeting in Washington on Tuesday. Once considered a lock for the Fed’s second interest rate cut of the year, the September meeting is being met with confusion by traders who aren’t sure which way the central bank will go.
Fed Fund futures prices imply a 51.9% chance of a rate cut on Wednesday, according to CME Group. That figure was as high as 95% earlier this month.
The Final Word: Although the Fed may delay its second rate cut until later this year, it’s widely believed that policymakers will extend their stimulus pledge. Earlier this month, the European Central Bank (ECB) unleashed new stimulus measures designed to boost economic growth and inflation in a region that has had very little of both.