STOCKS RALLY, OIL SPIKES: Here's what you need to know

Stocks extended Tuesday's gains and closed higher on the first day of the FOMC's two-day policy meeting and ahead of the key interest rate announcement on Thursday. Crude oil surged after data showed an unexpected drop in inventories.

First the scoreboard:

• Dow: 16,745.96, +146.11, (0.88%)
• S&P 500: 1,995.81, +17.72, (0.90%)
• Nasdaq: 4,887.22, +26.70, (0.55%)

And now, the top stories on Wednesday:

1. Inflation is still going nowhere. The consumer price index fell 0.1% in August month-on-month, in line with expectations. It was the first drop in seven months. Compared to a year ago, CPI rose 0.2%, also in line. "Core" CPI, which excludes volatile food and gas prices, fell 0.1% month-on-month, and rose 0.2% year-on-year. The Bureau of Labor Statistics said that, once again, low gas prices contributed to the drop in inflation. Like the Federal Reserve, Capital Economics' Steve Murphy said the downward pressure on prices from low energy prices and the strong dollar is likely to fade soon.
2. Homebuilder sentiment is at a 10-year high. The index from the National Association of Homebuilders was 62. "We were nervous that the drop in stock prices would dampen activity for a while, but homebuilders have instead reported rising current sales and buyer traffic, though the latter is hared to square with the modest dip in future sales expectations," wrote Pantheon Macroeconomics' Ian Shepherdson in a client note.
3. Crude oil spiked. West Texas Intermediate crude oil futures rose more than 5% in New York to as high as $47.34 per barrel. It was the highest level since early September. There were two big oil-related headlines out today. First, the Energy Information Administration reported that crude inventories fell by 2.1 million barrels last week. Analysts had forecast a build by 1.2 million barrels. And, White House spokesman Josh Earnest said the president won't support legislation that lifts the 40-year old ban on US crude exports.
4. SABMiller confirmed that rival beer giant Anheuser-Busch InBev is planning to buy the company. AB InBev's brands include Budweiser and Corona, and it is the world's largest brewery by revenue. SABMiller's stock spiked as much as 20% in over-the-counter trading, while Anheuser Busch Inbev rose 7%. Bank of America Merrill Lynch analysts noted that last year, the two companies held about 58% of the industry's $33 billion in global profits.

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