U.S. stocks rally amid rate hike concern

U.S. stocks traded higher on Monday, the first trading day of the month, as traders shifted their focus from corporate earnings to the timing of the next interest rate hike.

At midday, the Dow Jones Industrial Average was up 18.80 points, or 0.10 percent, to 18,451.04. The S&P 500 gained 2.32 points, or 0.11 percent, to 2,175.92. The Nasdaq Composite Index increased 32.68 points, or 0.63 percent, to 5,194.81.

After its two-day meeting last week, the central bank kept federal funds rate unchanged, reiterating that it continued to closely monitor inflation indicators and global economic and financial developments.

However, Fed officials noted risks to the economic outlook have diminished this time, leaving doors open to raise rate possibly as early as September.

Investors will keep a close eye on Friday's nonfarm jobs report this week for more clues on the central bank's next move.

On the economic front, the July purchasing managers' index registered 52.6 percent, a decrease of 0.6 percentage points from the June reading of 53.2 percent, according to the Institute for Supply Management (ISM) Monday.

"Manufacturing growth apparently continued in July, but deterioration in leading components of the ISM point to a slowdown ahead," said Chris Low, chief economist at FTN Financial, in a note.

U.S. stocks wavered and traded mixed last week, as Wall Street mainly focused on corporate earnings and economic reports.

U.S. real gross domestic product (GDP) increased at an annual rate of 1.2 percent in the second quarter of 2016, well below market consensus of 2.6 percent, according to the "advance" estimate released by the Commerce Department Friday.

For the past week, the Dow fell 0.7 percent, and the S&P 500 edged down 0.1 percent, while the Nasdaq gained 1.2 percent. Endit