Investing.com - U.S. stocks jumped up on Friday on news China will stimulate its economy as well as on sentiments that the Federal Reserve will release a more dovish-than-expected policy statement on Wednesday.
At the close of U.S. trading, the Dow 30 rose 0.59 %, the S&P 500 index rose 0.75%, while the NASDAQ Composite index rose 0.75%.
The Volatility S&P 500 index, which measures the outlook for market volatility, was down 9.84% at 12.73.
The Federal Reserve will announce its latest statement on monetary policy this Wednesday, and expectations for the U.S. central bank to cut its monthly bond-buying program to $15 billion from $25 billion allowed for steady trading earlier.
Investors were also hoping to see a timetable as to when U.S. interest rates may rise.
By afternoon trading, however, Wall Street Journal reporter Jon Hilsenrath said in a webcast that the Fed may say rates will remain low for a "considerable time," a phrase the bank often uses, and instead focus more on wording the closing of its bond-buying program.
Hilsenrath's opinion found agreement on Wall Street, as investors took up positions betting that the Fed will try to avoid overwhelming markets by discussing the end of stimulus programs alongside a change in forward guidance, leaving the latter for a future policy meeting.
Elsewhere, reports that the People Bank of China is set to provide CNY500 billion of liquidity to the country’s five largest banks to stimulate the economy also sent investors flocking to stocks.
Also on Tuesday, official data showed that U.S. producer price inflation was flat last month, compared to expectations for a 0.1% rise after a 0.1% gain in July.
Core PPI, which excludes food, energy, and trade rose 0.1% in August, in line with expectations, after an increase of 0.2% in July.
Energy companies, meanwhile, saw heavy demand on the coattails for rising oil prices.
OPEC Secretary General Abdallah El-Badri reportedly said earlier the oil bloc may trim output to boost currently slumping crude prices, which sparked a rally in energy markets on talk total production could fall to 29.5 million barrels per day from 30 million when the group meets in November.
Reports that Libya's El Sharara oil field saw output reduced after rockets hit an area near a refinery fueled the rally as well by stoking supply-disruption concerns.
Oil prices have slid in recent weeks on concerns that global supply remains ample while demand remains weak.
Leading Dow Jones Industrial Average performers included UnitedHealth Group Incorporated (NYSE:UNH), up 1.31%, Visa Inc (NYSE:V), up 1.23%, and Exxon Mobil Corporation (NYSE:XOM), up 1.19%.
The Dow Jones Industrial Average's worst performers included Nike Inc (NYSE:NKE), down 0.51%, Caterpillar Inc (NYSE:CAT), which was unchanged, and Goldman Sachs Group Inc (NYSE:GS), which was up 0.04%.
European indices, meanwhile, ended the day lower.
After the close of European trade, the DJ Euro Stoxx 50 fell 0.29%, France's CAC 40 fell 0.44%, while Germany's DAX fell 0.28%. Meanwhile, in the U.K. the FTSE 100 fell 0.18%.
On Wednesday, markets will move on the Federal Reserve's statement on monetary policy followed by Fed Chair Janet Yellen's press conference.
Elsewhere, the U.S. is to produce data on consumer prices, while the euro zone is to release revised data on consumer price inflation.