U.S. stocks rally ahead of Fed meeting

U.S. stocks traded higher in the morning session Monday as Wall Street awaited the Federal Reserve's policy meeting.

By midday, the Dow Jones Industrial Average rose 106.86 points, or 0.59 percent, to 18,230.66. The S&P 500 added 11.23 points, or 0.52 percent, to 2,150.39. The Nasdaq Composite Index gained 21.42 points, or 0.41 percent, to 5,265.99.

Investors kept a close eye on the Fed's two-day policy meeting, scheduled to begin Tuesday, for more clues on the timing of a next rate hike.

Financial markets have been choppy last week on contrasting remarks on rate hikes by Fed officials.

"The Fed is expected to leave rates unchanged this week, but investors are now looking for a hike in December. Fed officials have called a hike before the end of the year 'likely,' but they said the same thing about a hike before the end of the summer in June and July," said Chris Low, chief economist at FTN Financial, in a note.

Meanwhile, oil prices were also in focus, which traded about 2 percent higher around midday Monday after Venezuela said the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers were close to reaching an output deal.

On the economic front, U.S. builder confidence in the market for newly built, single-family homes in September jumped 6 points to 65 from a downwardly revised August reading of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index released Monday.

On Friday, U.S. stocks ended lower after wavering in a tight range as investors pondered over the key inflation data. Enditem