The Fed's announcement is due on Thursday morning NZ time, the same day New Zealand's Reserve Bank will review its cash rate.
"Everyone's looking to the policy meetings overseas, that's where the volatility has come from recently," said Robert Garden, investment adviser at Craigs Investment Partners.
"The Bank of Japan is having their policy meeting too. Those things are raring up after a period of pretty benign, good market trading since the UK [Brexit] vote. The market has ticked along pretty nicely since then - valuations are looking a bit pricey and a situation like that can be used to justify a bit of sell off."
Property stocks which were sold off last week gained, with Stride Property leading the index, up 3.1 per cent to $2.01, and Kiwi Property Group rose 1.7 per cent to $1.49.
"Any rate rises are going to be gradual and we're not going to be making any moves here," Garden said. "So there are some investors thinking that they look like reasonable buying after that pullback last week. With what's on the horizon, I think we're going to see continued volatility till the end of the year, driven by news from overseas."
A2 Milk advanced 2.6 per cent to $1.95, NZX gained 1.9 per cent to $1.08, and The Warehouse Group lifted 1.7 per cent to $2.93.
Tegel Group Holdings was the worst performer, down 2.9 per cent to $1.68. Tower dropped 2.5 per cent to 99c, Vista Group International fell 2.2 per cent to $6.60, and Scales Corp dropped 1.8 per cent to $3.30.
Outside the main index, Briscoe Group rose 1 per cent to $3.87. The homewares retailer lifted first-half profit by 33 per cent and hiked its interim dividend after widening gross margins with more rigorous inventory management and boosting sales.
Managing director Rod Duke, who owns about 78 per cent of the company, said margins in the second half of the financial year will come under pressure as the kiwi dollar falls, making imports more expensive, while the period is one week shorter than the second half of 2015.
"They're still reasonably optimistic about their outlook, and out of any of the retail stocks in New Zealand, Briscoes has been a pretty steady performer," Garden said. "It's definitely been the pick of the bunch in the retail side of things over the last three or four years."
Synlait Milk was unchanged at $3.62. The NZX-listed dairy company almost tripled annual profit to $32.7m but it warned growth next year would be more modest.
