A surge in Boeing led Wall Street out of a two-day slump on Wednesday, but US stocks pared gains in early afternoon trading as investors awaited the Federal Reserve's comments to gauge the future path of monetary policy. The Fed is expected to leave interest rates unchanged and signal a gradual tightening of monetary policy later this year as the economy continues to expand and job gains remain solid.
The Fed's statement, due at 2 pm ET (1900 GMT), will also be parsed for the central banks' gauge of inflation, which remains below its target, the risks to economic outlook, and any assessment of the impact of the US tax overhaul on growth. "There is some nervousness ahead of the Fed statement," said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird.
"In general, people are a lot more concerned about a hawkish tone from the Fed. While the market has priced in three rate hikes for 2018, if the economy continues to firm up and earnings remain solid, the possibility of a fourth rate hike definitely becomes more firm." In another sign of a strong labour market, an ADP report showed the US private sector added more jobs than expected in January. The report comes ahead of the more comprehensive non-farm payrolls data on Friday.
At 12:36 pm ET, the Dow Jones Industrial Average was up 155.81 points, or 0.6 percent, at 26,232.7, the S&P 500 was up 6.83 points, or 0.24 percent, at 2,829.26 and the Nasdaq Composite was up 23.81 points, or 0.32 percent, at 7,426.29. The Dow had tumbled nearly 540 points over Monday on Tuesday amid a broad market sell-off as US Treasury yields surged.