Shares closed higher on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting slated to begin Tuesday.
The Dow Jones Industrial Average jumped 197.26 points, or 0.64%, to close at 31,019.68. The S&P 500 gained 0.69% to 3,899.89, and the Nasdaq Composite gained 0.76% to end at 11,535.02.
Stocks oscillated between gains and losses throughout the session, with the index of 30 stocks losing as much as 263 points earlier in the day. At session lows, the S&P 500 and Nasdaq were down more than 0.9% each.
Yields rose ahead of the Fed’s likely decision to raise its benchmark rate another 75 basis points to stifle inflation later this week. The 10-year Treasury yield rose above 3.51% and hit an 11-year high.
After brief hope over the summer that the Fed might end its aggressive tightening campaign, investors sold stocks again, fearing the central bank might go too far and tip the economy into a tailspin. a recession.
Investors are focused on the Fed’s monetary policy meeting due to start on Tuesday, during which the central bank is expected to raise interest rates another 75 basis points. Investors are also looking for guidance on corporate earnings ahead of the start of the next reporting season in October.
“We are in a wait-and-see approach and the markets are waiting for some sort of bullish or bearish catalyst to take us out of this trading range,” said Adam Sarhan, CEO of 50 Park Investments. “Markets are struggling to orient themselves and that’s the fundamental news.”
Nine of the 11 S&P 500 sectors ended the day on a positive note, led by materials, consumer discretionary and industrials. Financials also rose, with some investors betting that higher rates could benefit their bottom line. Health care lagged, falling after President Joe Biden’s comments indicated the pandemic was over.
Stocks tumbled last week as investors reacted to a hotter-than-expected inflation report and a dismal warning from FedEx about a “significantly worsened” global economy. The major averages posted their fourth weekly loss in five weeks.
A few economic data releases on deck this week beyond the key Fed meeting, including August housing starts on Tuesday and early jobless claims on Thursday.
—CNBC’s Patti Domm contributed reporting.