Investing.com – US stocks closed higher on Tuesday as growing optimism that Republicans would be able to deliver tax reform lifted sentiment, while financials gained on expectations that the Federal Reserve is set to raise rates for the third time this year.
The Dow Jones Industrial Average closed higher at 24,504.80. The S&P 500 closed 0.15% higher, while the Nasdaq Composite closed at 6862.32, down 0.19%.
Senate Majority Whip John Cornyn said Tuesday that a tentative agreement on a tax bill could come as soon as today.
"We don't have it right this minute, but we are getting closer. We've ping-ponged a number of offers and counter offers back and forth and are making good progress," Cornyn, who is the second ranking Republican in the Senate, said.
Reports of a tentative agreement on tax bill come as traders turned their attention to monetary policy as the Federal Reserve kicked off its two-day meeting on Tuesday ahead of widely expected interest rate hike on Wednesday.
Expectations of an interest rates hike supported an uptick in financials, mostly banks, which lifted the broader indexes higher.
Also supporting sentiment on US stocks was economic data suggesting that trend of slowing inflation could be nearing an end after wholesale inflation data topped expectations.
The Labor Department said on Wednesday its producer price index for final demand increased 0.4% last month. In the 12 months through August, the PPI rose 3.1% after rising 2.8% in October. That beat economists’ forecast of a 2.9% for November.
'Bulls and Bears' on Wall Street
The top Dow gainers for the session: Goldman Sachs Group Inc (NYSE:GS) up 3%, Verizon Communications Inc (NYSE:VZ) up 2.6% and Boeing Co (NYSE:BA) up 2.4%
3M Company (NYSE:MMM) down 1.1%, McDonald’s Corporation (NYSE:MCD) down 0.8% and Chevron Corporation (NYSE:CVX) down 0.6%, were among the worst Dow performers of the session.