Investing.com -- U.S. stocks rallied sharply on Tuesday reversing territory midway through the session, ahead of the start of a critical two-day Federal Open Market Committee meeting on Wednesday.
Upon the completion of its September monetary policy meeting on Thursday, the Federal Reserve could raise its benchmark Fed Funds Rate for the first time in nine years. The rate, which banks use to lend to other institutions on overnight loans, has remained at its current level between zero and 0.25% since December, 2008. A rate hike above its zero-bound level is generally viewed as bearish for equities, at least in the short run.
The Dow Jones Industrial Average and the NASDAQ Composite index each rose by more than 1% during Tuesday's session, while the S&P 500 Composite index also posted considerable gains on a bullish day for the major indices. The Dow gained 228.89 or 1.40% to 16,599.85 on Tuesday to emerge from correction territory for the first time this month. The NASDAQ also added 54.76 or 1.14% to 4,860.52, amid strong gains among large-cap stocks.
The S&P 500, meanwhile, rose 25.06 or 1.28% to 1,978.09, as all 10 sectors closed in the green. Stocks in the Industrials, Consumer Goods and Telecommunications industries led, each gaining more than 1.25% on the session.
The top performer on the Dow was Caterpillar Inc (NYSE:CAT), which added 1.81 or 2.49% to close at 74.58. Caterpillar finished just ahead of Microsoft Corporation (NASDAQ:MSFT), which gained 0.94 or 2.18% to 43.98. It came one day after reports surfaced that the technology giant could launch its Surface Pro 4, as well as two other handsets at a media event in New York on October 6. The worst performer was Walt Disney Company (NYSE:DIS), which fell slightly by 0.39 or 0.38% to close at 103.42. Disney ended the day as the only Dow component to close in the red.
The biggest gainer on the NASDAQ was VimpelCom (NASDAQ:VIP), which added 0.23 or 4.94% to 4.89. Shares in VimpelCom are still down roughly 45% on the year. The worst performer was Keurig Green Mountain Inc (NASDAQ:GMCR), which fell 1.22 or 2.06% to 58.13. Over the last 52 weeks, shares in one of the largest coffee makers in the U.S. are down more than 53%.
The top performer on the S&P 500 was Owens-Illinois Inc (NYSE:OI), which jumped 1.34 or 6.67% to 21.42, after the glass manufacturing company received an upgrade from Bank of America (NYSE:BAC). The worst performer was Host Hotels & Resorts Inc (NYSE:HST), which fell 0.41 or 2.32% to 17.27, one day after the Maryland-based Real Estate Investment Trust announced that it closed on a $500 million term loan to increase its credit facility to approximately $2 billion.
On the New York Stock Exchange, advancing issues outnumbered declining ones by a 2,175 to 953 margin.