U.S. stocks rise ahead of expected interest rate hike by Fed

Wall Street’s choppy session ends Monday with a higher close as investors brace for another sharp rate hike This week from the Fed.

The index oscillated between modest gains and losses for much of the day before heavy buying emerged in the final hour of trading. The S&P 500 rose 0.7%, recovering from a 0.9% loss. The Dow Jones Industrial Average rose 0.6% and the Nasdaq Composite gained 0.8%.

Technology stocks, retailers, banks and industrial companies helped lift the market. Apple rose 2.5%, Home Depot rose 1.6%, Bank of America rose 1.7% and United Airlines rose 3.3%.

Health care and real estate stocks fell, tempering gains in other markets. Pfizer fell 1.3% and Welltower fell 2.2%.

The two-year U.S. Treasury yield, which tends to follow expectations of Fed action, rose to 3.94% from 3.87% late Friday. The yield on the 10-year Treasury note, which affects mortgage rates, rose to 3.49% from 3.45%.

Shares of smaller companies also rose. The Russell 2000 closed up 0.8%.

Scott Ladner, chief investment officer at Horizon Investments, said trading volumes were lower than usual, suggesting that most traders were in no rush to make major changes ahead of the Federal Reserve’s announcement on interest rate policy Wednesday afternoon.

“Nobody really wants to be ahead of it,” he said. “It’s such a slippery market, both up and down.”

The S&P 500 gained 26.56 points to 3,899.89, the Dow gained 197.26 points to end at 31,019.68, the Nasdaq gained 86.62 points to 11,535.02 and the Russell 2000 gained 14.65 points to 1,812.84.

Wall Street remains focused on inflation and the Fed’s attempt to lower prices by raising interest rates dramatically. On Wednesday, the central bank will announce its latest interest rate decision. It is expected to raise the benchmark rate, which affects interest rates across the economy, by another three-quarters of a percentage point.

The broader market is shrugging off its worst week in three months following a surprisingly hot report on inflation and big companies, including FedExwarning of worsening economic trends.

Wall Street has been worried that the Federal Reserve’s plan to cool the hottest inflation in four years may be too aggressive and push the economy into recession by suppressing growth too hard. Higher interest rates also tend to weigh on stocks, especially in the pricier tech sector.

Investors will get another update on the housing sector on Wednesday at the National Association. of Realtors released its resale home sales data for August.

Average U.S. long-term mortgage rates climbed above 6 percent last week for the first time since the 2008 housing crash. Higher interest rates could make an already tight housing market more expensive for U.S. home buyers.

Britain is mourning a day for Queen Elizabeth II. Germany’s DAX rose 0.5%, while the Paris CAC 40 fell 0.3%. Hong Kong’s Hang Seng fell 1% and the Shanghai Composite fell 0.3%. Japanese markets were closed for a holiday.