U.S. stock markets surged on Tuesday ahead of Wednesday’s Federal Open Market Committee (FOMC), where the Federal Reserve is expected to announce its interest rate decision once the meeting concludes on Thursday. The two-day meeting will see Federal Reserve policymakers come together to what could be the first interest rate hike in nearly a decade. However, the shift away from expansion towards tighter monetary control may be gradual, according to some comments made by top Fed officials. Regardless, the change in policy is likely to have an effect on markets worldwide. Despite concerns over the strengthening of the dollar due to the rate hike, which has the potential to reduce revenues for large exporting companies, U.S. stock markets rose on Tuesday with the industrial sector leading the charge. The SPDR Dow Jones Industrial Average (NYSE:DIA) average rose 228.9 points, or 1.4%, to trade at 16,59985. The S&P 500 index added 25.06 points, or 1.28%, to trade at 1,978.09. The Nasdaq composite rose 54.76 points, or 1.14%, to trade at 4,860.52. The stock market has recovered some losses incurred in August and September, however it is still down from this year’s peak after turmoil caused by major concerns over growth in China. Some of the gains could be attributed to the most recent U.S. consumer spending data. Despite falling short of some expectations, the report has shown that Americans have increased their spending on cars, restaurants, groceries and clothing during the month of August. Overall, retail sales rose 0.2% last month after a 0.7% increase in the previous month.
Crude Oil showed marked gains on Tuesday as well, adding $1, or 2.27%, to trade near $45 a barrel. Gains followed data released by the American Petroleum Institute showing that U.S. crude oil supplies have fallen by 200,000 barrels. However, the official government-issued report by the Energy Information Administration (EIA) will be available later today. According to another recently released report, the number of active U.S. oilrigs has fallen by 10 units in the week ending September 11. The number of active crude oil rigs has been reduced over the past year by 59%, Signaling that energy companies have cut back on exploration and production activity, reflecting the oversupplied status of the markets.
UK unemployment data will be released today, followed by U.S. inflation data and the Energy Information Administration’s crude oil stockpile report. However, the focal point of the week will arrive on Thursday when the Federal Reserve will publicly announce its interest rate decision.