Wall Street moved higher, while the US dollar slid, as investors await the outcome of the Federal Reserve policy meeting on Wednesday to gauge the timing of the next interest rate increase.

While few expect Federal Open Market Committee to announce a rate hike this week, most bet they will do so later this calendar year.

"Fears about the Fed increase and then dissipate, and all you can do is try to follow that news flow," lan Higgins, chief investment officer at Coutts & Co in London, told Bloomberg. "The Fed is very aware of what the market is looking for and hopefully we'll get no policy shock."

In 3.10pm trading in New York, the Dow Jones Industrial Average rose 0.2 per cent, while the Nasdaq Composite Index inched 0.01 per cent higher. In 2.55pm trading, the Standard & Poor's 500 Index gained 0.3 per cent.

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"The market has been all over the place. It's been driven by the threat of higher interest rates," Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, told Reuters. "Most people feel the most unloved bull market in recent memory will be cut off at the knees by higher interest rates and the Fed is certainly threatening that in the near term."

The Dow moved higher as advances in shares of 3M and those of Boeing, recently trading 1.2 per cent and 1.1 higher respectively, outweighed slides in shares of Merck and those of Intel, down 1.3 per cent and 1 per cent respectively.

Some are keen for the Fed to move now.

"Let's get on with it already," Michael Arone, chief investment strategist at State Street Global Advisors, told Reuters.

"It will cause some challenges to the market but I think that is healthy in context of a normal business cycle. It will increase the cost of capital, and flush out some riskier assets in the short term. But that is probably the right thing to do."

Meanwhile, a report showed that a gauge of US home builder sentiment in September climbed to the highest level in almost a year, according to the National Association of Home Builders and Wells Fargo.

Most people feel the most unloved bull market in recent memory will be cut off at the knees by higher interest rates and the Fed is certainly threatening that in the near term.

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"As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward," NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Illinois, said in a statement. "The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017."

In Europe, the Stoxx 600 Index ended the day with a gain of 1 per cent from the previous close. Germany's DAX index rose 1 per cent, France's CAC 40 index climbed 1.4 per cent, while the UK's FTSE 100 Index increased 1.5 per cent.