US stocks closed higher on Tuesday as investors weighed fresh consumer confidence data and eagerly looked ahead to the Federal Reserve's upcoming policy decision. The benchmark S&P 500 led the day's gains, jumping approximately 0.7%, while the Dow Jones Industrial Average and tech-heavy Nasdaq Composite also climbed by 0.4% and 0.5%, respectively.

The positive market sentiment was supported by a rally in bonds after the US Treasury reduced its estimate of government borrowing for the fourth quarter, easing some pressure on stocks. The 10-year Treasury yield finished the trading day flat, trading around 4.87%.

Investors are closely focused on whether the Federal Reserve will hold interest rates steady or increase them at their meeting beginning on Tuesday. Policymakers have hinted that the recent surge in Treasury yields could influence their decision-making process due to its tightening effect.

The US stock market is currently heading towards its third consecutive month of losses, with the benchmark S&P 500 managing to avoid losses since the onset of the pandemic in March 2020. The Dow Jones Industrial Average has erased its gains for the year, while the tech-heavy Nasdaq Composite remains up over 22%.

Wall Street analysts expect the Federal Reserve to keep interest rates steady in an effort to bring inflation back to its 2% target. However, Fed Chair Jerome Powell has cautioned that inflation is still too high and further rate hikes may be necessary if the economy remains strong.

The Federal Reserve's decision on interest rates will be announced at 2 pm ET on Wednesday, and the market will closely scrutinize the central bank's language and future rate hike outlook.

In other news, the World Bank has warned that ongoing conflicts in the Middle East and Ukraine could significantly disrupt the global oil supply, potentially driving prices up by 56% to 75%. The bank's Commodity Markets Outlook outlined three risk scenarios, with the most severe one projecting a price surge up to $157 per barrel.

Meanwhile, several notable stocks trended during afternoon trading. Pinterest saw its stock surge nearly 20% after reporting better-than-expected third-quarter results, while Nvidia shares fell over 2% on news that the chipmaker could lose up to $5 billion in orders to China due to US export restrictions. Pharmaceutical giant Pfizer slipped over 1% after incurring a $5.6 billion non-cash write-off in the third quarter, and Caterpillar shares fell 6% despite beating earnings expectations, as the company anticipates a decline in demand in the fourth quarter. JetBlue and Spirit Airlines also experienced declines, with JetBlue's anticipated acquisition of Spirit Airlines currently facing an antitrust trial.

Overall, the US stock market showed resilience on Tuesday, remaining in positive territory despite earlier losses. Investors eagerly await the Federal Reserve's decision on interest rates and will closely monitor any indications of future rate hikes as they navigate the ever-changing market landscape.