Stocks inched higher on Monday, after an upbeat outlook from No. 2 home-improvement retailer Lowe's Cos. boosted hopes that corporate profits may be near recovery.

However, activity was light as investors stayed on the sidelines one day before an expected interest rate cut by the US Federal Reserve.

Investors held back from making big bets ahead of the Fed's policy meeting on Tuesday. "Everyone's waiting for the Fed to see what it says," said Mark Coffelt, portfolio manager with Texas Capital's Value & Growth Portfolio.

"The key is their attitude. Hopefully they'll say that the economy is recovering, but if it's not, we'll lower interest rates more." The latest economic news brought a hint of optimism to the market after the Conference Board said its index of leading economic indicators rose 0.3 per cent in June, marking the first time it scored a fourth consecutive month of gains since the October 1999 to January 2000 period.