NEW YORK - Wall Street advanced Monday as investors undeterred by record oil prices speculated that the Federal Reserve will cut interest rates Wednesday to energize the slow economy and lure more buyers into the troubled credit markets.
The Dow Jones industrial average rose 63.56, or 0.46 percent, to 13,870.26.
Broader stock indicators also gained. The Standard & Poor's 500 index rose 5.70, or 0.37 percent, to 1,540.98, while the Nasdaq composite index rose 13.25, or 0.47 percent, to 2,817.44.
The Fed begins its two-day meeting today, and the market widely expects a rate reduction Wednesday. Central bankers lowered rates by a half-point in September for the first time in four years after the credit marketsseized up and posed the threat of recession. The economy has a hard time growing if companies can't borrow and lend money.
But with energy prices soaring to new records, the risk of inflation - which tends to accelerate when rates are low - may give policymakers some pause.Crude oil futures passed $93 a barrel for the first time on the New York Mercantile Exchange on Monday after a storm led Mexico's state oil company to suspend about a fifth of its oil production.
The Fed remains concerned about inflation but is likely to lower the target federal funds rate by a quarter-point due to overriding credit worries, said Scott Wren, equity strategist for A.G. Edwards & Sons.
"It's kind of a psychological sort of move," Wren said. "A 25 basis-point cut isn't going to ease the credit crunch. But it'll give the Fed a little more time to figure out what's going on with the economy."
The dollar was mixed against rival currencies, while gold prices rose to 27-year highs.
Though record-high crude prices and rising metal prices hurt consumers, they helped bolster the stocks of companieswho sell commodities. Exxon-Mobil Corp. and Alcoa Inc. were among the biggest gainers in the Dow.
Alcoa rose $1.08, or 2.7 percent, to $40.43, and ExxonMobil rose $1.40 to $93.61.
In addition to the hope for a rate cut, an earnings report from electronics retailer RadioShack Corp. encouraged Wall Street. RadioShack, after swinging to a third-quarter profit thanks to reduced expenses and improved inventory, rose 80 cents, or 4.1 percent, to $20.42.
Earnings so far have generally shown weakness in the financial and housing sectors but strength in others.
"It's a stock-pickers' kind of market. If you're in the right sectors, you're going to do well, but if you're in the broader market, you've got exposure to those weak sectors," said Rob Lutts, president and chief investment officer of Cabot Money Management.
Trading was relatively light Monday. Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume came to 3.02 billion shares, down from 3.51 billion Friday.
Business, Pages 22 on 10/30/2007