US stocks gained before Fed meeting

US stocks rose, sending the Standard & Poor’s 500 Index on its way to a new record high, as Federal Reserve policy makers gathered for a two-day policy meeting.

The S&P 500 added 0.4% to 1,704.76 at 4 p.m. in New York. The benchmark index is less than five points below its record high of 1,709.67 reached on Aug. 2. The S&P 500 Equal Weighted Index, which strips out biases related to market value, jumped 0.5% to a record. The Dow Jones Industrial Average increased 34.95 points, or 0.2%, to 15,529.73 today. About 5.1 billion shares changed hands on U.S. exchanges, 14% below the three-month average.

“Everybody’s looking forward to tomorrow to see what the Fed’s statement is going to be,” Jerry Braakman, the chief investment officer of First American Trust in Santa Ana, California, said by phone for Bloomberg. His firm oversees $1 billion. “With inflation being benign, it doesnt require a more aggressive tightening than the market would expect.” Large buyback plans are “returning capital to the market, which helps propel it to new highs,” he said.

A Labor Department report yesterday showed the cost of living in the U.S. rose less than forecast in August, a sign it will take time for inflation to reach the Fed’s goal. Central bankers have said they are watching prices to ensure the U.S. doesnt slip into a long period of diminishing increases, or disinflation, that damages the expansion.

Corporate news were focused on Microsoft. Company increased 0.4% to $32.93. The repurchase program, which has no end date, replaces another $40 billion buyback plan that was due to lapse at the end of this month, Redmond, Washington-based Microsoft said in a statement. The company’s dividend will rise 22% to 28 cents a share.

After struggling to keep up with rivals in the smartphone and tablet markets, Microsoft is rebuilding its strategy and seeking a new chief executive officer. The company has come under pressure from activist investor ValueAct Holdings LP, which pushed Microsoft to return more money to shareholders, according to a person with knowledge of the matter.

US Airways Group Inc. climbed 3.6% to $18.72 and Delta Air Lines Inc. advanced 0.7% to $23.32. The two airlines were each raised to “overweight” from “neutral” at JP Morgan Chase & Co.