US open: Wall Street stages slight bounce ahead of Fed decision

US stocks were climbing slightly on Wall Street come Tuesday, with tech stocks managing to claw back some of their recent heavy losses as investors eyed the start of the Federal Reserve's two-day policy meeting.

At 1605 BST, the Dow Jones Industrial Average was higher by 0.21% or 45.51 points at 21,281, as the S&P 500 edged up by 0.16% to 2,433 and the Nasdaq Composite rose 0.15% to 2,433.

US equity markets closed lower on Monday but tech stocks - which have rallied sharply in the last 12 months - managed to finish off their lows, having taken a battering at the end of last week.

From a sector standpoint, the best performing segments of the market were: Recreational products (2.07%), Paper (2.03%) and Aluminium (1.88%).

The Fed was scheduled to announce its rate decision on Wednesday, with an interest rate hike already largely priced in.

Commenting on the possible outcome of the FOMC meeting, Eric Lascelles, chief economist at RBC global asset management, said: "The Fed’s long-awaited June decision beckons. There, markets assign a 90% likelihood to another 25bps rate hike and this would be the second rate increase this year. This expectation seems about right given recent Fed statements and the reasonable health of the US economy.

"We would budget for a ‘dovish’ hike, however, as the Fed may be wary about over-promising future actions given a bit less economic strength relative to earlier in the year, slightly lower inflation and the absence of long-awaited fiscal stimulus. There is also an ongoing debate internally about the appropriate timing and pace of any effort to shrink the central bank’s balance sheet. This is unlikely to be resolved at the June meeting."

The pound was 0.57% stronger versus the US dollar ahead of the open of US markets, as sterling popped to 1.2729 after the latest data from the Office for National Statistics showed UK inflation surged faster than expected to a new four-year high in May.

In economic news, US producer prices were flat in May versus April, while the year-on-year rate dipped from a 2.5% clip to 2.4%, according to the Bureau of Labor Statistics.

Economists had projected no change in prices versus April and a 2.3% rate of increase year-on-year.