US stocks jump as Fed interest rate decision edges closer

 Traders work on the floor of the New York Stock Exchange on Sept 15, 2015 in New York City.
Traders work on the floor of the New York Stock Exchange on Sept 15, 2015 in New York City.PHOTO: AFP

NEW YORK (AFP) - Wall Street stocks finished with decisive gains on Tuesday on modestly higher US retail sales ahead of the Federal Reserve's interest rate decision later this week.

The Dow Jones Industrial Average advanced 228.89 points (1.4 per cent) to 16,599.85.

The broad-based S&P 500 jumped 25.06 (1.28 per cent) to 1,978.09, while the tech-rich Nasdaq Composite Index rose 54.76 (1.14 per cent) to 4,860.52.

US retail sales rose 0.2 per cent in August, boosted by robust auto sales, but slightly below analysts' consensus estimate.

The retail sales report was one of the few remaining US data points ahead of the Fed's two-day monetary policy meeting that begins Wednesday.

The central bank will announce on Thursday whether it will lift its key rate for the first time since 2006.

Peter Cardillo of Rockwell Global Capital said investors are ready for the Fed to finally act after months of talking about raising interest rates this year.

"Maybe the market is basically saying this about the Fed: 'Raise interest rates, get this over with,'" he said.

Petroleum-linked stocks rose with oil prices. Dow member Chevron jumped 1.9 per cent, Transocean gained 5.2 per cent and ConocoPhillips added 1.1 per cent.

Large banks also gained, including Dow member JPMorgan Chase (+1.9 per cent), Bank of America (+2.2 per cent) and Citigroup (+2 per cent).

Aluminum giant Alcoa rose 2.7 per cent and Ford surged 3.9 per cent after the two companies announced they will collaborate to develop new aluminum alloy technology for the auto industry.

Fast-food chain Sonic tumbled 8.3 per cent as it announced that same-store sales for the fourth-quarter increased 4.9 per cent, below the 5 per cent projected by analysts.

Alibaba gained 3.6 per cent, rebounding from a 3.1 per cent drop in the prior session.

Bond prices slid. The yield on the 10-year US Treasury rose to 2.28 per cent from 2.19 per cent Monday, while the 30-year advanced to 3.06 per cent from 2.95 per cent. Bond prices and yields move inversely.