US stocks escaped negative territory by the end of the day, despite the S&P 500 approaching a new low for the year.
The Dow Jones Industrial Average was up about 85 points by the end of the day.
The tech-heavy Nasdaq was up around 30 points with American Airlines Group Inc (NASDAQ:AAL), Texas Instruments Inc (NASDAQ:TXN), Netflix Inc (NASDAQ:NFLX) and Facebook Inc (NASDAQ:FB) among the top gainers.
The Russell 2000 was down about 0.3% by the closing bell.
Dova Pharmaceuticals Inc (NASDAQ:DOVA) was one of the worst-performing stocks on the small-cap index following a management shake-up and weak preliminary results.
Up north, the TSX jumped around 45 points with cannabis company Aphria Inc taking the spot of top gainer after announcing plans to build on its previous agreement with Rapid Dose Therapeutics Inc (CSE:DOSE) to bring RDT’s oral strip delivery technology to the German cannabis market.
1:15 PM: US stocks rally as Boeing Co and Johnson & Johnson buybacks approved
The Dow Jones Industrial Index climbed 275.84, or 1.2%, to 23,868.82, a day after dropping more than 500 points.
Fed policy makers began their two-day policy meeting and are due to publish their decision on interest rates Wednesday.
Boeing was the biggest winner among the blue chips, surging 4.6% to $330.70 a day after announcing its directors approved a $20 billion share buyback program and increased the company’s dividend.
Johnson & Johnson climbed 2.7% to $131.94 after saying its board approved a $5 billion buyback. The stock has been hurt by reports that it knew for decades that its baby powder contained cancer-causing asbestos.
Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) were the biggest losers among the 30 Dow companies as West Texas Intermediate crude oil future prices fell to below $48 a barrel. Exxon Mobil declined 1.4% to $73.05 while Chevron decreased 1.1% to $111.21.
The tech-driven Nasdaq rose 1.3% to 6,841.39. The broader S&P 500 Index was up 0.8% to 2,566.94.
Small-caps also climbed, with the Russell 2000 gaining 0.9% to 1,391.11. In Canada, the TSX advanced 0.8% to 14,484.83.
9:50 AM: US stocks rebound after rout as market digests start of Fed meeting on rates
US stocks climbed Tuesday in a rebound as market players cautiously eyed the start of the two-day policy meeting of the Federal Reserve and the possibility of another increase in US interest rates.
Opinion is divided on whether the Fed would increase its overnight lending rate, with US President Donald Trump claiming it is "incredible" the US central bank is even looking at another increase.
The Dow Jones Industrial Index rose more than 1.1% to trade around 23,867, having dropped 500 points on Monday.
The tech-driven Nasdaq added over 1% to 6,829. The S&P 500 was up 1% to 2,571.
The small-cap Russell 2000 retreated close to 1.6% to 1,388.
In Canada, the TSX fell around 1.6% to trade at 14,362.
Most market participants expect the Fed to increase rates by another 25 basis points.
Some have urged the Fed to hit the pause button on increasing rates as it unwound its balance sheet built up during the 2008 global recession.
"If you think your job is tough, consider Federal Reserve Chairman Jerome Powell. He’s signaled for months that the Fed will raise interest rates again this week, but economic and financial signals suggest he should pause," The Wall Street Journal editorial board said.
If the Fed raises rates, they may be followed by the Bank of Japan, whose monetary policy decision will be out Thursday, followed by a briefing from Governor Haruhiko Kuroda.
The Bank of England's decision is also set for Thursday.
Later in the week, financial markets are bracing for the possibility of a partial US government shutdown over Trump's demand for money on his border wall with Mexico.
7:17 AM: US stock futures rebound after falling to its lowest in more than a year
US stock futures were modestly higher in a rebound from another sharp fall in the previous session as market players seemingly stepped aside ahead of the start of the two-day policy meeting of the Federal Reserve which kicks off on Tuesday.
Opinion is divided on whether the Fed would again increase its overnight lending rate, with US President Donald Trump claiming it is "incredible" the US central bank is looking at another increase.
It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!— Donald J. Trump (@realDonaldTrump) December 17, 2018
Overnight, investors were disappointed that Chinese President Xi Jinping offered no fresh commitments to open or stimulate the world’s second-biggest economy in a keynote speech.
The Dow Jones Industrial Index futures rose almost 0.4% to trade around 23,760, having dropped another 500 points on Monday.
The tech-driven Nasdaq added nearly 0.6% to 6,502. The S&P 500 gained 0.4% to 2,563.
Only the small-cap Russell 2000 tumbled 2.3% to 1,378.
After the Fed decision on Wednesday, the Bank of Japan’s monetary policy decision will be out Thursday, followed by a briefing from Governor Haruhiko Kuroda. The Bank of England decision is also set for Thursday.
The markets are also bracing for the possibility of a partial US government shutdown over Trump's demand for money on his border wall along the Mexican border.
In London, bargain hunting has emerged on the FTSE.
The Nikkei dropped almost 2% in Tokyo and the Shanghai index in China slipped 0.8%.