US open: Stocks rise ahead of Fed interest rate decision

US stocks rose on Thursday ahead of the Federal Reserve’s interest rate decision.

At 1451 BST the Dow Jones Industrial Average rose 0.28%, the S&P 500 climbed 0.32% and the Nasdaq increased 0.30%.

The Federal Reserve is expected to sit tight on interest rates in its policy decision at 1900 BST amid uncertainty surrounding Britain’s EU referendum on 23 June and following weak employment data for May.

While the Fed is not expected to raise rates on Wednesday, chair Janet Yellen’s post-meeting press conference may give clues on the timing of the next hike.

“With markets pricing in a zero percent chance of a rate hike at the June meeting, attention will instead turn to the Fed’s characterisation of the domestic economy,” said Societe Generale.

“Despite the weak May employment report, we expect the Fed will be keen on striking a balanced stance, offsetting a modest downgrading of the labour market with a somewhat more upbeat assessment of household spending.”

Ahead of the policy announcement, data from the Fed showed industrial production contracted 0.4% in May after a revised 0.6% increase in April. The decline was in line with economists’ expectations.

Manufacturing fell 0.4% in May driven by a sharp 4.2% decline in output of autos and auto parts. Analysts had expected a 0.1% fall last month compared to a 0.2% gain.

The Labor Department said US producer prices rose 0.4% in May against expectations for a 0.3% gain as an increase in fuel costs pushed wholesale inflation higher.

Oil prices have rebounded in the past few months.

However, oil prices were sitting lower on Thursday on worries about the global supply glut.

West Texas Intermediate crude fell 1.3% to $47.48 per barrel and Brent dropped 1.9% to $48.88 per barrel.

A report from the International Energy Agency on US weekly crude inventories will be released at 1530 BST.

Elsewhere, China’s banks extended 985.5bn yuan in new yuan loans in May, exceeding analysts' expectations of 750bn yuan and well above the previous month's levels of 555.6bn yuan.

The move came as the central bank has pledged to keep policy accommodative to support the slowing economy.

In corporate news, shares in restaurant chain operator Bob Evans Farms were sharply lower after its financial forecasts missed analysts’ expectations.

Jabil Circuit is due to report third-quarter earnings after the closing bell.