US close: Stocks gain as UK inflation picks up in November

US stocks finished higher on Tuesday after data showed an improvement in inflation ahead of the Federal Reserve's interest rate decision.

US inflation rose 0.5% in November from a year ago, matching analysts' estimates and marking an improvement from the previous month's 0.2% increase, according to the Bureau of Labor Statistics.

However, CPI fell to 0% in November on a month-on-month comparison, after a 0.2% rise in October, meeting forecasts.

James Hughes, chief market analyst at GKFX, said the improvement in year-on-year inflation paves the way for the Fed to raise interest rates on Wednesday when the central bank wraps up its two-day policy meeting.

“As far as the inflation story alone goes, we must wait for the Core CPE reading before taking stock of the full picture, but today was all about not upsetting the Fed’s preparations, and it seems we have come through unscathed,” he said.

The Fed is widely expected to raise rates for the first time in nearly a decade by 25 basis points.

Meanwhile, sentiment among US housebuilders remained fairly flat in December, according to the National Association of Home Builders/Wells Fargo. The housing market index nudged down one point to 61, a touch below estimates for a reading of 62 but comfortably above the 50 threshold that indicates improvement.

The Empire State general business conditions index, which measures manufacturing conditions in the New York area, rose to a reading of -4.6 in December from -10.7, beating the -7 estimate.

In the commodities space, energy shares got a break as oil prices rebounded from heavy falls in the previous session, with West Texas Intermediate up 2.2% to $37.14 and Brent crude up 0.99% to $38.30 a barrel at 2118 GMT.

Gold and copper declined 0.28% and 2.79%, respectively, while silver rose 0.29% on the Comex.

Among corporate stocks, FactSet Research Systems was on the back foot after its first quarter revenues fell short of expectations.

3M was also under the cosh as investors digested a weak earnings outlook from the company.

On the upside, Sirius XM Holdings rallied after the satellite radio operator said it has signed Howard Stern to another five-year deal.

The dollar was 0.63% higher against the euro, 0.70% up against the pound and up 0.58% the yen, while spot gold was 0.4% firmer at $1,063.56.