The Dow industrials closed at the highest level in nearly five years last night (this morning, Singapore time) in a lightly traded session before key decisions in Germany and the United States that could give markets a further boost.

Equities have rallied in recent weeks on hopes for monetary stimulus by central banks. Germany's highest court will today decide on the legality of the euro zone's new bailout fund. The United States Federal Reserve could announce additional steps to support low interest rates tomorrow.

The Dow Jones industrial average ended up 69.07 points, or 0.52 per cent, to 13,323.36. The Standard & Poor's 500 Index closed up 4.48 points, or 0.31 per cent, to 1,433.56. The Nasdaq Composite Index gained 0.50 points, or 0.02 per cent, to 3,104.53.

On the New York Stock Exchange, two stocks rose for every one that fell. Energy, industrial and financial firms led the Dow's advance. On the Nasdaq, three stocks rose for every one that fell, but most of the gains were reversed in the afternoon as shares of Apple dropped in heavy volume, slipping 0.32 per cent to US$660.59 (S$812.06).

Economists forecast a 60 per cent chance the US Fed will announce another round of quantitative easing at the end of its two-day meeting. Disappointing US August jobs data released last Friday bolstered that view.

"I expect the Fed to announce an additional quantitative easing programme. I don't think it's a good idea. I don't think it's warranted," said Harris Financial Group Managing Partner Jamie Cox.

Some investors have concerns that a lot of the good news has already been priced in, exposing markets to a decline should the Fed disappoint. They also argue that the Fed's actions have already distorted market prices.

"We're in a technically overbought situation, so those traders are going to take their profits going into the Fed meeting," Mr Cox said. "The Nasdaq has run up so much over the last couple of days, any disappointment by the Fed could cause a reversal."

TODAY