A rebound in commodities drew investors back into the US stock market.
Major stock indicators bounced back today from a drop on Monday.
The Dow Jones industrials rose 51 points after losing 41 on Monday.
In an about-face, the dollar weakened against other major currencies and commodities like oil and gold bounded higher, lifting energy and material stocks. Financial stocks also rose sharply.
The gains came as the Federal Reserve began a two-day meeting on interest rates. Investors hope the Fed will provide a clearer indication of when it may raise rates when it issues a statement at the conclusion of the meeting tomorrow.
The Fed is widely expected to keep rates at their record low of near zero for the time being. Rock-bottom interest rates have helped fuel the market’s nearly seven-month-old rally, making cash plentiful and cheap and encouraging investors to buy up riskier assets.
The market appears to be following a well-established pattern where brief selloffs are met with more buying as investors fear missing out on a continued rally.
“Reluctantly, investors are continually being dragged into a market that is finding a path of least resistance to the upside,” said Art Hogan, chief market analyst at Jefferies & Co.
The consensus on Wall Street is that the economy is on the mend despite ongoing challenges like unemployment. But investors still have doubts over how strong the recovery will be, and whether the stock market’s more than 50% move off of 12-year lows in March accurately reflects the still fragile state of the economy.
“Right now, it’s a more orderly market,” said Greg Reynholds, senior vice-president of asset management at Lenox Advisors. “People are digesting the data, trying to figure out exactly where we’re headed.”
The Dow Jones industrial average rose 51.01, or 0.5%, to 9,829.87. The Standard & Poor’s 500 index gained 7.00, or 0.7%, to 1,071.66, while the Nasdaq composite index rose 8.26, or 0.4%, to 2,146.30.
More than two stocks rose every one that fell on the New York Stock Exchange, where volume totalled 1.3 billion shares compared with 1.2 billion on Monday.