Wall Street lifts on earnings

United States stocks close higher ahead of two-day Federal Reserve policy meeting.

US stocks have closed higher despite caution ahead of a two-day policy meeting being held by the US Federal Reserve.

At the closing bell, the Dow Jones Industrial Average lifted 86.63 points, or 0.53%, to 16,535.37.

The broad-based S&P 500 gained 8.90 points, or 0.48%, to 1,878.33, while the tech-heavy Nasdaq Composite Index surged 29.14 points, or 0.72%, to 4,103.54.

Driving the gains were strong earnings results as pharmaceutical giant Merck joined a long list of firms beating market expectations. Investors were also cheered by news IBM had raised its dividend.

Economic data was largely overlooked despite the rate of home price growth declining and consumer confidence softening. Wall Street took this news in its stride, viewing it as an aid to interest rates remaining lower for longer.

Moves were, however, kept in check by anxiety ahead of the release of a large batch of data later this week, including first quarter GDP and April jobs numbers in the US. Investors will also keep a close eye on Chinese manufacturing figures.

Meanwhile, the Fed's Federal Open Market Committee will conclude a two-day policy meeting tomorrow, with investors expecting the central bank to press on with its push to reduce stimulus.

"The consensus opinion is that there won't be much, if any, change to the directive and that the FOMC will curtail its monthly asset purchases by another $US10 billion ($10.8bn) to $45bn," Briefing.com analyst Patrick O'Hare said.