Stocks rose in choppy trading on Tuesday as investors hoped the Federal Reserve's policy panel would add more monetary stimulus to kick-start economic recovery.
At the two-day meeting that starts Tuesday, the Fed is expected to try to push already-low long-term interest rates even lower by tilting toward longer-duration bonds in its portfolio, a move known as Operation Twist. Many hope the Fed will come up with additional measures to boost the lackluster economy.
There is really no reason for people to make bets until we get a better idea of what the Fed is going to do and until we get the latest round of news or rumor from Europe. This is not a fundamentally driven market, said John Canally, investment strategist and economist for LPL Financial in Boston.
Until we see some bold action from Europe or the Fed, it will be hard for us to break outside of this (S&P) range between 1,120 and 1,220.
The Standard & Poor's 500 Index <.SPX> was up 6.23 points, or 0.52 percent, at 1,210.32. The Dow Jones industrial average <.DJI> jumped 50.26 points, or 0.44 percent, at 11,451.27. The Nasdaq Composite Index <.IXIC> put on 15.25 points, or 0.58 percent, at 2,628.08.
The market appeared to shrug off Standard & Poor's downgrade of Italy's credit rating by one notch, an unexpected move that increased strains on the already stressed euro zone.
In the latest economic data, U.S. housing starts declined more than expected in August as groundbreaking for both single-family and multi-family units decreased.
(Reporting by Angela Moon; editing by Jeffrey Benkoe)