U.S Stocks gained in Monday trading as Swiss bank UBS issued a profit warning and announced a capital injection and investors bet the Federal Reserve will cut interest rates at its policy meeting on Tuesday.

The Fed's policy committee, meeting Tuesday, are broadly expected to cut the fed funds rate, a key short-term lending rate, by a quarter-percentage point, to 4.25 percent. Policy makers cut rates at the previous two meetings.

Swiss bank UBS issued a profit warning and said it will write down some $10 billion of subprime mortgage holdings, which could lead to full-year losses. The bank also revealed plans to borrow $11.5 billion from outside investors including the government of Singapore and an unidentified Middle Eastern investor.

The Standard & Poor's 500 Index added 9.34, or 0.6 percent, to 1,514.00 as of 12:11 p.m. in New York. The Dow Jones Industrial Average increased 94.71, or 0.7 percent, to 13,720.29. The Nasdaq Composite Index gained 14.42, or 0.5 percent, to 2,720.58.

Last week, the Dow ended 1.90 percent higher, the S&P 500 index finished up 1.59 percent, and the Nasdaq ended up 1.70 percent.

Wall Street has reported higher gains recently as investors have become more confident in the Fed's willingness to loosen its interest rate policy again. Over the last two weeks, the Dow has risen more than 640 points.

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