Stocks rose on Wednesday ahead of a widely expected hefty rate hike from the Federal Reserve, with investors waiting for cues on the length and depth of further policy tightening to tame surging price pressures.

In midday trading, the Dow Jones Industrial Average was up nearly 150 points, or 0.5%, at 30,862.

The S&P 500 was up 18 points, or 0.5%, at 3,874, and the Nasdaq Composite was up 37 points, or 0.3%, at 11,454 on boost from a more than 0.5% rise in shares of megacap growth stocks such as Apple and Microsoft.

Ten of the 11 major S&P 500 sectors were up in early trading, led by a 1.1% jump in energy and industrial shares.

The central bank will likely lift its policy rate by 75 basis points for the third time to a 3.00-3.25% range at the end of its two-day policy meeting, which will be followed by Fed Chair Jerome Powell’s news conference. 

Updated economic projections from policymakers will be in focus, as investors would like to gauge where interest rates are headed, how long it would take inflation to fall and the pain rising prices are inflicting on the US economy.

“What (investors) really want to see is whether or not we are going to have a continued, super hawkish Fed in terms of the way that messaging has been – are they really committed to getting inflation under control at the risk of pulling the economy into a recession,” said Brandon Pizzurro, director of public investments at GuideStone Capital Management.

Markets are pricing in a 21% chance of a 100 bps rate increase later in the day and seeing a terminal rate at 4.50% in March 2023. 

The benchmark S&P 500 is hovering near two-month lows and is below 3,900 points — a level considered by technical analysts as strong support for the index.

“If (stocks) drop on disappointing Fed, no one should be surprised if we test those June (lows),” said David Wagner, portfolio manager at Aptus Capital Advisors in Cincinnati, Ohio.

As interest rates continue to creep up, pressuring stock valuations, Wagner recommends having a portfolio tilted toward value stocks.

The S&P 500 value index, which includes cyclical and economy-linked stocks such as banks, energy, industrials and materials, is down 11.4% so far this year, compared with a 25.2% drop in its growth counterpart, which is dominated by technology shares.

The yield curve inversion between the two-year and 10-year notes — seen as a recession harbinger — and growing evidence of the impact of decades high inflation on earnings outlooks from companies ranging from FedEx to Ford Motor have also added to woes in a seasonally weak period for markets.

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