The Dow ended up 0.20% and the S&P 500 finished up 0.48%, while the Nasdaq ended up 0.22%.
Investors picked up bank and high-growth stocks ahead of Wednesday’s expected announcement by the Fed, amid near universal agreement among analysts the U.S. central bank will raise interest rates by 50 basis points, which would mark its largest rate hike since May 2000.
In April, Wall Street was hammered by uncertainty around the Fed’s ability to engineer a soft landing for the economy as it tackles inflation, and megacap stocks came under pressure from rising rates.
Rebecca Felton is senior market strategist at Riverfront Investment Group.
“Today we have a bounce in the markets, maybe somewhat of a relief rally, maybe some oversold conditions. People are expecting a hawkish move out of the Federal Reserve tomorrow, a 50 basis point rate hike. So, I think a lot of that news is already priced into the market and so folks are starting to dip their toes again.”
Western Digital jumped 14.47% – the largest percentage gainer on the S&P 500 – after activist investor Elliott Investment Management urged the company to separate its Flash business and offered to invest $1 billion to facilitate a sale or spin-off of the business.
Shares of Estee Lauder sank 5.81% after the cosmetics maker cut its full-year profit forecast.
And Hilton Worldwide slid 4.25% after the hotel operator forecast a bleak full-year profit, as fuel prices and labor costs have pressured profits for the tourism industry.
Read More: S&P 500 ends higher ahead of Fed decision