Wall Street gains ahead of Fed interest rate decision

US stocks rose more than 1 percent to session highs on Wednesday, ahead of a much-awaited Federal Reserve announcement that investors hope will point to a more moderate pace of future interest rate hikes and spark a year-end rally.

The central bank is widely expected to raise rates for the fourth time this year when its two-day policy meeting ends at 2 p.m. ET (1900 GMT), but the focus will be on whether it will still hint at three hikes next year as it did in September.

Fed funds futures are pricing in only one more rate rise next year. The latest Reuters poll showed economists expect two rate hikes, with the probability of a U.S. recession in the next two years jumping to 40 percent.

The S&P financials index - the worst performing among the 11 S&P sectors this month - rose 1.5 percent, with rate-sensitive banks also gaining 1.5 percent.

The technology sector, down for the fourth month in a row after leading a rally earlier in the year, rose 1.2 percent and gave the biggest boost to the markets.

"The selling may have gotten overdone, so you see some buyers coming in," said Shawn Cruz, senior trading specialist at TD Ameritrade in Chicago.

"There's a concern that the Fed being overly hawkish could impact growth in the economy, so a less aggressive Fed might relieve some of those fears and that is why you're seeing growth names recover here."

Eight of the 11 sectors rose more than 1 percent, with only the defensive utilities, real estate and consumer staples indexes gaining slightly.

A rough couple of months have pushed all three major indexes more than 10 percent below recent highs, into what is known as correction territory, and that has sparked calls, including from President Donald Trump, for the Fed to hold fire.

At 12:35 a.m. ET, the Dow Jones Industrial Average was up 296.59 points, or 1.25 percent, at 23,972.23, the S&P 500  was up 30.34 points, or 1.19 percent, at 2,576.50 and the Nasdaq Composite was up 73.50 points, or 1.08 percent, at 6,857.41.

Microsoft Corp's 2.4 percent gain gave the biggest boost to the S&P 500 and the Nasdaq. The biggest drag on the two indexes was Facebook Inc's 3.6 percent slide.

The fall came after the New York Times reported that Facebook allowed some companies far greater access to data than disclosed. The company said the access was provided only after user permission.

Separately the attorney general for Washington, D.C. said the state had sued Facebook over Cambridge Analytica's use of data from the social-media giant.

FedEx Corp, seen as a bellwether for the U.S. economy, sank 8.9 percent, on course for its biggest one-day drop in 10 years, after slashing its 2019 forecast blaming an economic slowdown.

Micron Technology Inc fell 2.4 percent after giving a tepid forecast that exacerbated fears that the chip boom was fizzling out.

Advancing issues outnumbered decliners for a 2.71-to-1 ratio on the NYSE and a 2.08-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 29 new lows, while the Nasdaq recorded four new highs and 288 new lows.