US open: Stocks rise as traders mull BoJ and await FOMC policy decisions

US stocks gained as traders awaited the Federal Reserve’s policy decision after the Bank of Japan altered its stimulus programme.

At 1516 BST, the Dow Jones Industrial Average rose 0.47% to 18,214.54 points, the S&P 500 increased 0.52% to 2,150.92 points and the Nasdaq grew 0.58% to 5,271.40 points.

At the same time, oil prices climbed after data showed a surprise drop in US crude inventories. The American Petroleum Institute revealed a 7.5 million barrel fall in US crude inventories to 507.2 million barrels last week, compared to an estimated increase of 2.8 million barrels.

The Energy Information Agency said US commercial crude oil inventories decreased by 6.2 million barrels last week to 504.6 million barrels.

West Texas Intermediate crude crude jumped 1.8% to $44.90 per barrel and Brent advanced 1.3% to $46.53 per barrel.

Meanwhile, investors are looking ahead to the Federal Reserve’s policy decision at 1900 BST. The Fed is widely expected to keep interest rates unchanged. Analysts will be focusing on the tone of the policy announcement for hints on the timing on the next rate increase.

David Morrison, senior market strategist at SpreadCo, said: “There’s very little likelihood that the central bank will tighten monetary policy. Not only has recent US economic data been patchy of late, but the Fed has done nothing to prepare the markets for a rate hike.

“If it announced an increase in its fed funds rate then we can expect market turmoil. While the Fed knows it has to push rates up from current levels, it won’t risk cratering the bond and equity markets with a shock move ahead of the Presidential Election.”

Earlier, the BoJ kept its negative interest rate of -0.1% and its quantitative easing programme at 80trn yen a year but said it would aim to keep yields on 10-year government bonds around current levels of 0%.

In corporate news, CarMax shares dropped after the used car retailer reported second quarter sales that missed forecasts.

General Mills edged lower as the food company posted a drop in profit and revenue in the latest quarter as sales of yoghurt continued to struggle.

Microsoft Corp was higher after saying late on Tuesday that it will bump its quarterly dividend and that it has approved share buyback programme.