US open: Stocks gain as traders weigh earnings, await FOMC rate decision

US stocks gained on Tuesday as traders sifted through another barrage of corporate earnings and awaited the Federal Reserve’s interest rate decision.

The Dow Jones Industrial Average rose 0.13%, the S&P 500 climbed 0.15% and the Nasdaq increased 0.13% at 1437 BST.

Procter & Gamble advanced after posting quarterly earnings that surpassed expectations.

Post-it maker 3M edged lower despite reporting first quarter profit that beat analysts’ projections.

DuPont climbed after its first quarter earnings topped forecasts and the company raised its outlook.

Chocolate giant Hershey Co. slumped as it reported first quarter revenue that missed forecasts and provided a downbeat 2016 earnings outlook.

Reynolds American slid as it reported first quarter sales that fell short of analysts’ estimates.

Apple is due to report its earnings after the closing bell.

Away from earnings, the Fed is widely expected to stand pat on interest rates on Wednesday. Market participants will be scrutinising the accompanying statement for any clues on future policy.

Bank of America Merrill Lynch reckons the Fed will likely hike rates again this summer, potentially in June if the global market selloff ahead of the Brexit vote in the UK is limited. Otherwise, it still sees a good case for the next hike in July.

“Either way, we believe the Fed will have to start preparing the markets for a possible rate hike at an upcoming meeting this summer. With no press conference or forecast update at the April Federal Open Market Committee (FOMC) meeting, focus will be on the statement language.

“The FOMC will likely acknowledge the weak data to start the year, but contrast with expectations for continued gradual progress toward full employment and the inflation target. The Committee may note global risks have dissipated slightly, or that the disinflationary effects of the US dollar or commodity prices have started to ease. Some signal of this type could help to modestly lift the market’s assessment of rate hike likelihood. More explicit language or guidance would be more powerful, but also a low-probability outcome.”

On the macroeconomic calendar, new orders for US durable goods rose 0.8% in March to $230.7bn, according to the Commerce Department, missing expectations of a 1.8% increase.

The rise was underpinned by a surge in defence spending, and followed on from a revised 3.1% drop in February.

House prices in the US rose a touch less than expected in February, according to the S&P/Case-Shiller National Home Price Index.

The S&P/Case-Shiller 20-City Composite was up 5.4% on the year, down from 5.7% the previous month and missing expectations of a 5.5% increase.

US services activity picked up in April, according to a flash estimate by Markit. The purchasing managers’ index rose to 52.1 in April from 51.3 in March, beating forecasts of 52.0. A reading above 50 signals an expansion in the sector while a level below that indicates a contraction.

US consumer confidence fell in April as optimism on the outlook for business conditions and the labour market weakened, according to the Conference Board. The sentiment index fell to 94.2 this month from 96.1 in March, below estimates for a reading of 96.0.

Meanwhile, oil prices regained strength as the dollar weakened.

West Texas Intermediate crude rose 1.4% to $43.28 per barrel and Brent crude climbed 1.5% to $45.16 per barrel at 1459 BST.

The dollar dropped 1.0% against the pound, dipped 0.44% against the euro and slid 0.13% versus the yen.