U.S. stocks jump as Fed meeting begins

U.S. stocks traded sharply higher around midday on Tuesday, as the Federal Reserve started its two-day policy meeting.

By noon, the Dow Jones Industrial Average added 163.45 points, or 0.94 percent, to 17,531.95. The S&P 500 soared 20.00 points, or 0.99 percent, to 2,041.94. The Nasdaq Composite Index advanced 41.87 points, or 0.85 percent, to 4,994.10.

The Federal Open Market Committee (FOMC) began the highly-watched meeting Tuesday, and will release its post meeting statement at 2 p.m. Wednesday.

The U.S. central bank is widely expected to raise interest rates for the first time since June 2006. Analysts believed that the market has fully factored in the expected December rate hike.

"Calm is slowly spreading through financial markets on day one of the two-day Fed meeting, with global equities a little higher, bond yields backing off their flight-to-quality levels and oil finally finding a bid," chief economist at FTN Financial Chris Low said in a note.

A recovery in oil prices also provided some upward jolts to the stock market. Both the U.S. oil and Brent crude traded about 2 percent higher around midday Tuesday, halting a slide to 11-year lows.

On the economic front, the Consumer Price Index (CPI) for all urban consumers was unchanged in November on a seasonally adjusted basis, on par with market estimates, reported the U.S. Labor Department Tuesday. Over the last 12 months, the all items index increased 0.5 percent before seasonal adjustment.

The index for all items less food and energy, often referred to as the core CPI, rose 0.2 percent in November, the same increase as in September and October.

Meanwhile, U.S. builder confidence in the market for newly constructed single-family homes remained relatively flat in December, dropping one point to 61 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

On Monday, U.S. stocks ended higher after volatile trading as Wall Street eyed the Fed's policy meeting. Endit