PremiumUS stocks climbed, with traders awaiting economic data for clues on whether the Federal Reserve will decelerate its pace of monetary tightening to prevent a hard landing.
The Dow Jones Industrial Average rose 129.84 points, or 0.40%, at the open to 32,862.79.
The S&P 500 opened higher by 29.81 points, or 0.77%, at 3,901.79, while the Nasdaq Composite gained 166.59 points, or 1.52%, to 11,154.74 at the opening bell.
The Fed is widely expected Wednesday to announce a fourth straight 75-basis-point rate hike as it tries to rein in runaway prices, which has led to worries it will tip the world's top economy into recession, sending stocks tumbling.
But a recent report suggesting officials are looking to dial down the pace of increases has sparked a rally in risk assets over the past week – helped by signs other central banks are also trying to take a step back.
Traders will be closely watching figures on manufacturing, construction spending and job openings on the eve of the Fed decision. At a time when bad economic news is considered good news when it comes to policy wagers, data showing a slowdown in activity helped spur a rally in nearly oversold stocks in October, with the Dow Jones Industrial Average wrapping its best month since 1976.
“There is a growing consensus that global central bankers are becoming more sensitive to the risk of overtightening," said Katie Nixon, chief investment officer for Northern Trust Wealth Management. “The Fed has a conundrum, of course, in maintaining its steely inflation-fighting resolve — and credibility — while balancing the ever-growing fears of a policy mistake."
Nixon is betting that after another 75-basis-point rate increase in November, the Fed will slow down the pace to 50 basis points in December and make an additional quarter-point hike in early 2023.
Derivatives cues imply the pace of the ongoing rebound in the S&P 500 is likely to dwindle after the Federal Reserve's rate decision, according to Nomura Holdings Inc.