Stocks are recovering from earlier losses in volatile trading ahead of the Fed decision, with the Dow gaining 100 points

Traders work on the floor of the New York Stock Exchange during afternoon trading on September 13, 2022 in New York City.

Michael M. Santiago | Getty Images News | Good pictures

Stocks rebounded from earlier losses on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting that begins this week.

The Dow Jones industrial average traded 126 points, or 0.41% higher, while the S&P 500 and Nasdaq Composite gained 0.29% and 0.23%, respectively.

Investors are focused on the central bank’s latest policy meeting, which begins on Tuesday. The central bank is expected to raise interest rates by another three-quarters, although investors are eyeing guidance on corporate earnings before the next reporting season begins in October.

“This is a very low-confidence market going into the Fed,” said Trust’s Keith Lerner. “Maybe you’ll see signs of the same stabilization. But I think it reflects that you’ve gone down too hard and you’re not moving in a straight line, and we have the Fed coming in and the market is already looking pretty good. The hawks are moving into this crowd.”

In other news, the 10-year Treasury yield rose to 3.5% on Monday, its highest level in 11 years, as rates across the board continued to rise ahead of a decision to raise the benchmark rate by three quarters this week. Point to reduce inflation. After some brief hope over the summer that the central bank could soon begin its aggressive tightening campaign, investors have started to dump stocks again on fears that the central bank will go too far and push the economy into recession.

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All 11 major S&P 500 sectors rose or traded flat, led by consumer discretionary, industrials, financials and commodities. Health care was the laggard, falling 1.3%.

Stocks fell last week as investors reacted to a hotter-than-expected inflation report and FedEx’s dire warning about a “significantly worse” global economy. The major averages posted their fourth weekly loss in five weeks and hit two-month lows.

Beyond the Fed meeting, there are some economic data releases this week, including August housing starts on Tuesday and initial jobless claims on Thursday.

—CNBC’s Buddy Dome contributed reporting.

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