US stocks log third day of gains ahead of Fed's policy decisions

U.S. stocks rose for a third straight session after moving back and forth Tuesday, as investors were awaiting the Federal Reserve's announcement due out Wednesday after its two-day policy meeting.
The Dow Jones Industrial Average added 27.48 points, or 0.16 percent, to 16,808.49. The S&P 500 increased 4.21 points, or 0.22 percent, to 1,941.99. The Nasdaq Composite Index ticked up 16.13 points, or 0.37 percent, to 4,337.23.
The market continued its choppy trading that had been seen in past few sessions, with major stock indices toggling in and out of negative territory before closing mildly up in the day, as investors were somewhat shifting their attention to the Fed's upcoming move from ongoing geopolitical instability in Iraq.
As latest data showed that U.S. inflation is mounting more than expected, investors were pondering whether the U.S. central bank would send out signals about when it may initially rise federal funds rate after wrapping up the policy-setting meeting, which will culminate with the Fed's policy statement, its latest economic projections and Fed Chair Janet Yellen's press conference on Wednesday.
U.S. Consumer Price Index for All Urban Consumers increased 0.4 percent in May on a seasonally adjusted basis, the biggest gain since February 2013, thanks to rising food and energy prices, said the Labor Department. The figure topped economists' forecast for a 0.2-percent rise.
While the so-called core CPI, excluding food and energy components, advanced 0.3 percent in May from the prior month, also surpassing market consensus of a 0.2-percent increase.
In spite of the increasing inflation pressure, however, analysts still believed that the price figures would not derail policy stance of the Fed which is widely expected to stay on the course on tapering by cutting its monthly bond purchase to 35 billion U.S. dollars from 45 billion dollars, while reiterating that it will keep ultra-low interest rates for a long time.
Investors' renewed risk appetite offset disappointing economic data, lifting the U.S. equity market into positive terrain in the afternoon session, which closed up for three sessions in a row.
Among other data, U.S. privately-owned housing starts dropped 6. 5 percent in May to a seasonally adjusted annual rate of 1.001 million units, while building permits, a gauge of future construction, fell 6.4 percent to 991,000, said the Commerce Department Tuesday. Both readings came in below market expectations.
The CBOE Volatility Index, a gauge of fear in the market, fell 4.66 percent to end at 12.06, far below the long-term average of around 20.
Among the S&P 500's ten sectors, financials, consumer discretionary and industrials led the gains.
In other markets, U.S. oil price dropped as traders cashed profit after it gained 4 percent last week on Iraq worries.
Light, sweet crude for July delivery moved down 54 cents to settle at 106.36 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for August delivery gained 51 cents to close at 113.45 dollars a barrel.
The dollar rose versus other currencies as markets fretted about an earlier-than-expected rise in interest rate on rising inflation.
In late New York trading, the euro lost to 1.3543 dollars from 1.3570 dollars of the previous session. The greenback bought 102. 16 Japanese yen, higher than 101.83 yen of the previous session.
Gold futures on the COMEX division of the New York Mercantile Exchange went down for the first time in seven trading sessions on profit taking.
The most active gold contract for August delivery fell 3.3 dollars, or 0.26 percent, to settle at 1,272 dollars per ounce.