U.S. stocks advance before Fed announcement as Apple shares rise

File picture of traders at the trading floor of the New York Stock Exchange (NYSE). PHOTO : EPA
File picture of traders at the trading floor of the New York Stock Exchange (NYSE). PHOTO : EPA

NEW YORK (BLOOMBERG) - U.S. stocks advanced before the Federal Reserve's policy statement, with the central bank expected to hold interest rates near zero, while Apple Inc. rose following its earnings report.

Apple added 2 per cent after posting profit and revenue that exceeded analyst estimates and forecasting record holiday sales. Twitter Inc. tumbled 9.2 per cent after predicting weaker-than- estimated sales growth.

Rite-Aid Corp. dropped 8.1 per cent after surging 43 per cent on Tuesday before an official announcement that Walgreen Boots Alliance Inc. will buy the drugstore chain in a deal valued at US$17.2 billion (S$23.96 billion).

The Standard & Poor's 500 Index gained 0.4 per cent to 2,073.38 at 9:59 a.m. in New York, after two days of declines. The Dow Jones Industrial Average added 70.75 points, or 0.4 per cent, to 17,652.18. The Nasdaq Composite Index rose 0.3 per cent.

"It's all earnings and Fed-focused right now," said Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, which has $3 billion under management. "The market wants clarity from the Fed and the continued punch bowl, and they can't take away the punch bowl too quickly because of what's going on around the world."

Policy makers last month opted to not raise rates after China's slowdown and its August currency devaluation added uncertainty to the global economic picture, sparking turmoil in financial markets. Markets have calmed this month, and a rate cut by China's central bank last week helped the S&P 500 erase a loss for the year.

The main U.S. equity gauge is poised for its best monthly gain in four years after rebounding as much as 11 per cent from an August low. Energy, raw-material and industrial shares have helped propel the October rally, the same groups that weighed heavily in the benchmark's worst quarter since 2011 amid concern that weakness in China would spread.

While traders are pricing in little chance of the Fed raising rates today, they are seeking indications from the meeting on the trajectory of borrowing costs and the central bank's assessment of the economy's health. Uneven data, including weaker-than-forecast new-home sales and consumer confidence reports this week, have held down expectations for higher rates this year. March is the first month for which traders project at least even odds of a boost.

Investors will also look to quarterly results.