Market posts mild gain on bets that central bank will cut rates again; crude oil briefly hits record high above $93 a barrel.
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NEW YORK (CNNMoney.com) -- Stocks gained Monday afternoon, as investors eyed record oil prices and some upbeat earnings reports - and geared up for an expected interest rate cut from the Federal Reserve, later in the week.
The Dow Jones industrial average climbed 0.5 percent with under 2 hours left in the session. The S&P 500 index added 0.5 percent and the Nasdaq composite added 0.6 percent.
Stocks surged Friday in a broad-based rally, and some of that momentum spilled over to Monday, as investors continued to bet that the Fed will cut rates again.
"The market tends to go on automatic pilot in the day or two before a Fed meeting and right now it's trading on the anticipation of a quarter-percentage point cut and the increased liquidity it will bring," said Ryan Atkinson, market analyst at Balestra Capital.
Traders are betting that central bank policy makers meeting Tuesday and Wednesday will cut the fed funds rate, a key short-term interest rate, by at least a quarter-percentage point, to 4.50 percent.
The Fed cut interest rates last month for the first time in four years, lowering the fed funds rate by a half-percentage point to 4.75 percent. The cut reflected worries that the credit and mortgage market turmoil could spread to the broader economy.
Recent economic reports have kept those worries in place and have raised bets that the Federal Reserve will cut rates again, despite the recent spike in oil prices, which has increased inflationary pressures.
U.S. light crude for December delivery rose 66 cents to $92.52 a barrel on the New York Mercantile Exchange. Crude reached a $93.20 in electronic trading.
