By Victor Reklaitis and Anora M. Gaudiano, MarketWatch

'Investors are less optimistic about the economy than the Fed,' analyst says

U.S. stocks advanced on Tuesday, putting the Dow industrials and the S&P 500 index on track to build on the prior session's record close as the Federal Reserve kicks off its two-day meeting.

The central bank's Federal Open Market Committee is widely expected to announce its third and final interest-rate rise of 2017 on Wednesday, but investors want to see what the policy-making body signals about 2018.

What are the main benchmarks doing?

The S&P 500 was up by 8 points, or 0.3%, to 2,667, trading in record territory, after setting an intraday all-time high. Gains were broad-based, with nine of the 11 main sectors trading higher. Telecoms and financials were leading gains, while utilities and energy shares lagged behind.

The Dow Jones Industrial Average advanced by 134 points, or 0.5%, to 24,494, also trading in record territory. Boeing Co, Verizon Communication and Goldman Sachs Group Inc. were leading the gains up more than 2%.

The Nasdaq Composite inched 8 points, or 0.1%, higher to 6,883, still below it's record set two weeks ago.

The three equity gauges have scored strong gains in 2017, helped by factors such as an expanding U.S. economy, rising corporate profits, anemic expected returns for other assets and bets that the Trump administration will deliver tax cuts and other business-friendly policies. They are up between 19% and 28% as of Monday's close.

What are strategists saying?

"As the rate hike tomorrow is highly priced in, it's not the decision itself that will be important, but how the Fed's views the economy. At the moment, markets are less optimistic about growth and inflation than the Fed," said Kjersti Haugland, chief economist at DNB, Norway's largest financial services group.

"Market participants are more concerned about a looming recession or low inflation. The risk here is that the Fed is correct and wage inflation and consumer inflation will come back with vengeance, in which case they will have to be more aggressive," Haugland said.

What could help drive markets?

The Fed's policy makers are scheduled to begin their meeting Tuesday and then announce their interest-rate decision at 2 p.m. Eastern time on Wednesday. The announcement will be followed by departing Fed chief Janet Yellen's last news conference in that role.

Read more:Fed getting ready to hike as retail sales, but not inflation, pick up (http://www.marketwatch.com/story/fed-getting-ready-to-hike-as-retail-sales-but-not-inflation-picks-up-2017-11-29)

And see:Stock-market investors aren't afraid of the Fed anymore (http://www.marketwatch.com/story/stock-market-investors-arent-afraid-of-the-fed-anymore-2017-12-09)

A November reading on small-business confidence rose to its second-highest level on record (http://www.marketwatch.com/story/small-business-sentiment-in-november-powers-to-the-second-highest-reading-on-record-2017-12-12).

U.S. producer price index jumped 0.4% in November and is up 3.1% over the past 12 months.

Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)

An update on the federal budget is expected at 2 p.m. Eastern time.

Which stocks look like key movers?

Shares in Boeing Co.(BA) gained 3.2% after the aerospace giant late Monday announced boosts to its dividend and share-repurchase plan (http://www.marketwatch.com/story/boeing-increases-dividend-and-share-repurchase-plan-shares-gain-2017-12-11).

Shares in Comcast Corp.(CMCSA) tacked on 2.3% following news late Monday that the conglomerate is no longer bidding for entertainment assets (http://www.marketwatch.com/story/comcast-drops-out-of-fox-bidding-disney-reportedly-still-in-talks-2017-12-11) from 21st Century Fox Inc.(FOX) That could leave Walt Disney Co.(DIS) as the sole bidder remaining for the Fox assets.

Shares of Mattel Inc.(MAT) sank 3.6% after the toy maker warned of a gloomy holiday season, saying it will likely have to write down inventory and offer steep discounts.

What are other assets doing?

European stocks largely edged higher (http://www.marketwatch.com/story/european-stocks-edge-slightly-higher-as-oil-shares-charge-up-2017-12-12), while most major Asian equity gauges closed lower (http://www.marketwatch.com/story/asian-stocks-end-mostly-lower-but-rising-oil-prices-help-australias-benchmark-rise-2017-12-12).

Gold futures (http://www.marketwatch.com/story/gold-pauses-selloff-as-dollar-softens-though-pressure-from-stock-bitcoin-gains-persists-2017-12-11) were inching down, while oil futures gained, with the Brent crude rising to a fresh 2 1/2 -year high (http://www.marketwatch.com/story/brent-oil-rises-to-fresh-212-year-high-as-north-sea-pipeline-outage-reverberates-2017-12-12) as news of a major North Sea oil pipeline shutdown continued to reverberate.

The ICE U.S. dollar index was little changed. January bitcoin futures were retreating below $18,000 as their second full day of trading got underway (http://www.marketwatch.com/story/bitcoin-futures-keep-their-grip-on-18000-while-bitcoin-itself-stays-near-17000-2017-12-12), while bitcoin itself changed hands not far from the $17,000 mark.

(END) Dow Jones Newswires

December 12, 2017 14:16 ET (19:16 GMT)

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