US stocks gain ground ahead of latest interest rate hike

Stocks rose Wednesday morning on Wall Street ahead of a widely expected interest rate hike by the Federal Reserve.

The S&P 500 was up 0.7% at 10:14 a.m. ET. The Dow Jones Industrial Average rose 183 points, or 0.6%, to 30,895 and the Nasdaq rose 0.4%.

The broader market has been swinging between gains and losses throughout the week as investors await the latest interest rate update from the Federal Reserve. They will be watching closely later today as Fed Chairman Jerome Powell discusses the central bank‘s views on the economy and the Fed’s efforts to control the worst inflation in 40 years.

Treasury yields, which are trading at multi-year highs, have remained relatively stable. The 2-year Treasury yield, which tends to track Fed action expectations, rose to 3.98% from 3.97% on Tuesday night. The 10-year Treasury yield, which influences mortgage rates, fell to 3.54% from 3.56% on Tuesday evening.

The Fed has raised rates aggressively to try to rein in high prices for everything from food to clothing. It is expected to raise its key short-term rate by three-quarters of a point for the third time. That would take its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level in 14 years, and up from zero at the start of the year.

The Fed’s goal is to slow economic growth and calm inflation, but Wall Street fears it is putting the brakes on an already slowing economy too hard and triggering a recession. These worries were bolstered by reports showing inflation remains stubbornly high and statements from Fed officials that they will continue to raise rates until they are sure inflation is under control.

Central banks around the world also face inflation. The Bank of Japan began a two-day monetary policy meeting on Wednesday, although analysts expect the central bank to stick to its accommodative monetary policy. Rate decisions from Norway, Switzerland and the Bank of England come next. Sweden surprised economists this week with a full one-point rise.

Global tensions remain high as Russia’s invasion of Ukraine continues. The Russian-controlled regions of eastern and southern Ukraine have announced their intention to start voting this week to become part of Russia. The war has killed thousands of people, driven up food prices around the world and caused energy prices to soar.

Gasoline prices, which have helped fuel inflation for months, are generally falling. But, the average price of a gallon of gasoline rose for the first time in more than three months, from $3,674 to $3,681, according to the AAA motor club.

Several companies gained traction after giving investors encouraging financial updates. Cheerios maker General Mills rose 5.9% after raising its profit forecast for the year. CoverGirl owner Coty rose 5.1% following a strong revenue growth update and Walmart rose 1.9% after announcing it would hire 40,000 U.S. workers to holidays, most of whom are seasonal workers.

Cruise operators plummeted as Hurricane Fiona continued to batter the Caribbean. Carnival fell 5.7%.

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Yuri Kageyama and Matt Ott contributed to this report.

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