Investing.com – U.S. stocks closed higher on Tuesday, as technology stocks recovered from a two-day slump and financials gained momentum ahead of a widely expected interest rate hike from the Federal Reserve.
Investor focus shifted to monetary policy as the Federal Reserve’s two-day meeting got underway, with the majority of traders expecting the central bank to raise rates from 0.75-1% to 1.00-1.25%, when it concludes its meeting on Wednesday.
Elevated expectations of a June rate hike on Wednesday, spurred a move higher in financials, mostly banks, as Goldman Sachs, JPMorgan , and Citigroup ended the session in positive.
The focus on monetary policy overshadowed economic data showing that U.S. inflation held steady in May.
The Producer Price Index (PPI), a leading indicator of consumer price inflation was unchanged for the month May, a notch below forecasts of a 0.1% rise.
Inflation and jobs data are two of the main areas of the economy that the Fed considers in its decisions on future monetary policy, however, doubts have begun to emerge as to whether the Federal Reserve will raise rates for a total of three times this year as the pace of both jobs and inflation have slowed.
“Weakness in consumption is becoming more visible due to emerging headwinds from negative wage growth in real terms, combined with falling housing affordability and tighter credit standards. And while investment is finally picking up after being a drag on growth for many quarters, it has yet to offset the flagging consumer.” Said Anna Stupnytska, global economist at Fidelity International.
The Dow Jones Industrial Average closed in record territory at 21328.41. The S&P 500 gained 0.45% while the Nasdaq Composite closed at 6220.37, up 0.73%
The ‘Bulls and Bears’ on Wall Street
The top Dow gainers for the session: E I du Pont de Nemours & Co (NYSE:DD) up 2.1%, Visa Inc (NYSE:V) up 1.7%, while Cisco Systems Inc (NASDAQ:CSCO) rose 1.4%.
General Electric Company (NYSE:GE) down 1.7%, Verizon Communications Inc (NYSE:VZ) down 1.5% and Merck & Company Inc (NYSE:MRK) down 1%, were among the worst Dow performers of the session.