While you were sleeping: UPDATED Dow gains as oil prices soar

Wall Street was mixed, after both the Dow and the S&P 500 touched record highs again, while oil prices rallied amid a fresh agreement to ease output.

The Federal Reserve, which is set to start its two-day policy meeting tomorrow, is widely expected to announce its first rate hike in a year the next day.

Investors will scrutinise Fed chairwoman Janet Yellen's post-meeting press conference as well as the central bank's latest quarterly economic projections and fed funds rate outlook for clues about the pace of future rate increases.

US president-elect Donald Trump has pledged to up government spending and lowering taxes.

"This year we have the promise of fiscal stimulus, something the Federal Reserve has been clamouring for," New York-based JPMorgan Chase's private wealth management unit chief economist Anthony Chan told Bloomberg.

"With an economy that is running hot, granted, the Fed chairwoman has talked about letting the economy run a little hotter, but if that continues, then you are going to see the Federal Reserve having to do a little bit more" hiking than they may have thought, he said.

Futures traders are pricing in a 100% chance officials will raise borrowing costs, compared with 68% odds at the start of November, according to Bloomberg. Indeed, all 120 economists in a Reuters poll predict a rate hike.

Dow rises 39 points
At the close, the Dow Jones Industrial Average rose 39.58 points, or 0.1%, to 19,796.43. The Nasdaq Composite Index slipped 0.6% to 5412.54 and the Standard & Poor's 500 Index fell 0.1% to 2256.96.

The Dow rose to a record-high 19,824.59, while the S&P 500 climbed to a record 2264.03 before retreating.

"The market has been rising on the incoming administration's proposals, but how many of those actually pass through Congress remains to be seen," Chicago-based Kingsview Asset Management portfolio manager Paul Nolte told Reuters.

"Investors are expecting the Fed to hike rates but are more interested in the tone of the statement."

In the Dow, gains in Pfizer and Johnson & Johnson shares, trading 2.9% and 2.6% higher respectively, offset slides in Goldman Sachs and American Express shares, down 1.8% and 1.5% respectively.

In Europe, the Stoxx 600 Index ended the day with a 0.5% decline from the previous close. France's CAC 40 Index slipped 0.1%, as did Germany's DAX Index, while the UK's FTSE 100 Index shed 0.9%.

Oil prices soar
Oil prices soared, rising 2.6% to $US52.83 a barrel, as non-Opec producers including Russia agreed to cut production by 558,000 barrels per day next year. Saudi Arabia, meanwhile, flagged it could ease output more than previously agreed.

"Right now the market is kind of feeding on itself," Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut, told Reuters.

Prices might climb further, though once US crude reaches $US55 and Brent about $US60, "there are some concerns that are going to start to cap the rally," Mr McGillian noted.

Rising oil prices contributed to a selloff in government bonds, with the yield on the 10-year US Treasury note rising to 2.478% from 2.462% on Friday – a 17-month high. 

(BusinessDesk)