Wall Street Opens Higher as Investors Await Fed Meet

U.S. stocks were trading modestly higher on Tuesday as investors await major central-bank decisions this week.

Market reaction to weaker-than-expected housing starts data ahead of the bell was muted, however, home-building stocks such as Lennar Corp. and D.R. Horton Inc. were hit hard.

The S&P 500 index gained 7.7 points, or 0.4%, to 2,146 with nearly all main sector trading higher. Financials and industrials were leading gains, while energy shares lagged behind, following oil futures lower.

The Dow Jones Industrial Average rose 70 points, or 0.4%, to 18,190, with 27 of the 30 blue-chip companies trading higher. General Electric Company and Goldman Sachs Group Inc led the gains.

The Nasdaq Composite Index advanced 14.75 points, or 0.3%, to 5,249, boosted by a rally in biotech stocks. The iShares Nasdaq Biotechnology ETF was up 1%.

The gains come after a choppy session on Monday, when stocks closed essentially flat in anticipation of the closely watched Federal Reserve and Bank of Japan monetary-policy decisions on Wednesday.

"It is difficult for the market to rally that much with all the uncertainty surrounding the Bank of Japan and Federal Reserve meetings over the next two days," said Ian Winer, director of equity trading at Wedbush Securities.

"We are at a pivotal point when people are still counting on central banks being accommodating, but also betting on governments to pick up the baton on fiscal stimulus," Winer said.

The Fed kicks off its two-day meeting on Tuesday and will release its rate decision at 2 p.m. Eastern Time on Wednesday. Investors are widely expecting the central bank to stand pat on monetary policy, so attention is instead turning to the BOJ, where policy surprises are seen as more likely.

Japanese policy makers have fought hard in recent years to battle low inflation, slow growth and a strong yen, lowering rates into negative and launching an aggressive asset-purchase program. However, there is an increasing sense the measures are losing their effect and not producing the expected results.

"The BOJ has a particularly difficult job as it appears to be limited in what it can do that will both help it achieve its inflation target, which it is currently far from doing, and appease the markets and prevent the yen appreciating once again, making its job even more difficult," said Craig Erlam, senior market analyst at Oanda, in a note.

The BOJ rate decision is due before the U.S. markets open on Wednesday.

The yen was trading mixed against other currencies on Tuesday, with the dollar buying Yen 101.85, relatively flat compared with Yen101.92 late Monday in New York.

The U.S. ICE Dollar Index was up 0.1% at 95.949.