Stocks Rally Ahead of Fed Meeting as Oil Pullback Eases Inflation Fears

U.S. stocks closed higher Monday as investors positioned cautiously ahead of the Federal Reserve’s policy meeting this week, while a pullback in oil prices helped ease near-term inflation concerns. The Dow Jones Industrial Average rose 387.94 points to 46,946.4, while the S&P 500 gained 67.19 points to 6,699.38 and the Nasdaq Composite advanced 268.82 points to 22,374.2, according to market data from the closing bell.

The advance reflected a mix of relief and positioning ahead of the Federal Open Market Committee meeting that begins Tuesday. Investors widely expect policymakers to leave interest rates unchanged but are focused on the Fed’s updated economic projections and Chairman Jerome Powell’s press conference for clues about the path of future rate cuts.

Markets have grown increasingly sensitive to inflation risks after energy prices surged in recent weeks. Oil had become one of the most important inputs shaping the Fed’s outlook as geopolitical tensions disrupted shipping near the Strait of Hormuz and pushed energy costs higher, raising concerns about renewed inflation pressure.

Monday’s decline in crude prices offered temporary relief. The April WTI contract settled near $93.99, down $4.72, easing some of the pressure that rising energy costs had placed on inflation expectations.

Traders have already adjusted their outlook for monetary policy. According to CME FedWatch data investors have pushed expectations for the next potential rate cut out toward September as recent inflation readings and higher energy prices complicated the central bank’s path.

Political pressure has also added another layer of uncertainty around the meeting. President Donald Trump on Monday reiterated calls for the Federal Reserve to cut rates immediately, underscoring the tension between policymakers attempting to keep inflation under control and the White House’s push for easier monetary policy.

Technology shares led the gains. Investor optimism around artificial intelligence remained a tailwind for the sector as Nvidia’s annual GTC conference kicked off in San Jose, where the company projected AI chip demand could reach $1 trillion by 2027.

Still, the market’s focus now turns squarely to Washington. The Federal Reserve’s decision Wednesday—and especially Powell’s tone—could determine whether investors continue betting on rate cuts later this year or begin preparing for a longer stretch of restrictive policy if inflation proves more persistent.