NEW YORK (REUTERS) - U.S. stock indexes were sharply higher in Tuesday morning trading as crude oil prices recovered from near 11-year lows and ahead of a widely expected increase in interest rates later in the week.
The U.S. Federal Reserve begins a two-day policy meeting later in the day to decide on rates, with a statement scheduled for Wednesday.
Traders see an 83 per cent chance of a liftoff this week, according to the CME Group's FedWatch program, but investors are concerned about the pace of future rate hikes.
A free fall in prices of oil and other commodities has also rattled the junk bond market over the past week, with some high-profile funds forced to halt redemptions as yield spreads ballooned. "It's been hard to predict where the market is going on a day-to-day basis," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Mr Brown said he expects trading to be slightly volatile as traders set up positions ahead of the Fed's statement, adding that an increase in rates was largely priced in. "It will really be a shock to the market if (the Fed) didn't move," he said.
At 9:35 a.m. ET (10.35 pm Singapore time) the Dow Jones industrial average was up 161.95 points, or 0.93 per cent, at 17,530.45, the S&P 500 was up 21.54 points, or 1.07 per cent, at 2,043.48 and the Nasdaq Composite index was up 44.74 points, or 0.9 per cent, at 4,996.97.
All 10 major S&P sectors were higher, with the energy sector's 1.53 percent rise leading the advancers.
Global stocks rose on Tuesday as crude oil prices recovered from near 11-year lows.