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Modest Advance for Wall Street

The New York market rises as traders await the Fed. Oil hits another record high.

Updated from 4:09 p.m. EDT

Stocks in the U.S. were moderately stronger Monday as traders were in a buying mood ahead of this week's upcoming

Federal Reserve

rate decision.


Dow Jones Industrial Average

gained 63.56 points, or 0.46%, to 13,870.26, and the

S&P 500

tacked on 5.70 points, or 0.37%, to 1540.98. The

Nasdaq Composite

added 13.25 points, or 0.47%, to 2817.44.

The major averages were able to build on a late-session rally that closed out the previous week. On Friday, the Dow rose 134.78 points to 13,806.70, and the Nasdaq was up 53.33 points at 2804.19.

Breadth was mixed to start the week. On the

New York Stock Exchange

3.01 billion shares changed hands, as advancers topped decliners by a 6-to-5 margin. Volume on the Nasdaq reached 1.99 billion shares, with losers outpacing winners 8 to 7.

Airlines, transportation and banks stocks were among the worst performers of the day, while commodities and chip stocks gained ground.

The Amex Airlines Index, the Dow Jones Transportation Average and the KBW Bank Index all slipped 0.5%. The Philadelphia Gold & Silver Sector Index rose 1.7%, and the Philadelphia Semiconductor Sector Index added 1.3%.

The transportation group was again hindered by record oil prices, as the December crude contract topped $93 a barrel for the first time ever, rising $1.67 to close at $93.53. However, that didn't derail the overall market.

"Oil prices rise,

and the markets rise, as demand for oil remains high, indicating that the global economy is still chugging along," said Paul Nolte, director of investments with Hinsdale Associates. "Oil prices decline and the markets rally, as lower oil prices will add to consumers' ability to spend. The markets are not really paying attention to oil prices."

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Nolte warned, though, that rallies are starting to come "on lower volume and less participation than at any time since the August bottom."

Meanwhile, investors were waiting on a looming decision from the Fed on whether to lower lending rates. The Federal Open Market Committee convenes Tuesday for a two-day meeting, with an announcement expected Wednesday at 2:15 p.m. EDT.

Most economists are expecting a 25-basis-point reduction, which would be the second after the Fed kept its fed funds target rate at 5.25% for nine straight meetings, dating back to June 2006.

"The fed funds futures figure a 100% certainty of a rate cut this week," said Michael Sheldon, chief market strategist with Spencer Clarke. "The surprise is if the Fed cuts by a half-point or if they don't cut rates at all, which would be a major disappointment for the markets. However, there could be some alarm that the Fed knows something we don't, and that things could be much worse than we expect."

While the earnings inflow was much slower than it has been in previous days, some big companies were still reporting, including Dow component


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, which exceeded analyst targets, and


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, which guided lower for next year.

Verizon tacked on 31 cents, or 0.7%, to $45.91, but Kellogg slumped $1.52, or 2.8%, to $52.92.


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reported a third-quarter profit that nearly doubled from a year ago, easily beating the Thomson First Call average estimate. The company also boosted its full-year view. Shares of Humana, though, relinquished early gains and closed down $2.08, or 2.8%, to $73.48.

Also, shares of

Merrill Lynch


were in focus amid reports that CEO Stan O'Neal is close to a deal to exit the company. Rumors of O'Neal's departure sent the stock 8.5% higher last time out, and Merrill finished with another gain of $1.32, or 2%, at $67.41.

Elsewhere, Treasury prices were higher in the absence of any economic releases. The 10-year note was up 6/32 in price, yielding 4.38%. The 30-year bond added 23/32 in price, yielding 4.66%. The dollar was again making record lows against the euro.

Overseas markets were stronger. In Asia, Hong Kong's Hang Seng rallied 3.9% overnight, and Japan's Nikkei 225 climbed 1.2%. In Europe, London's FTSE 100 was better by 0.7%, and Germany's Xetra Dax was up 0.8%.