NEW YORK (AP) — U.S. stocks are drifting higher on Wednesday as Wall Street waits to hear where the Federal Reserve may be taking interest rates.
The S&P 500 was up 0.4% in midday trading. The Dow Jones Industrial Average was up 198 points, or 0.5%, as of 11:30 a.m. Eastern time, and the Nasdaq composite was 0.5% higher.
Some of the strongest moves were again in the oil market, where crude prices swung with hopes that Israel’s fighting with Iran could cool. President Donald Trump said on Wednesday that Iran has reached out to him and that it’s not “too late” for Iran to give up its nuclear program, though he also declined to say whether the U.S. military would strike the country.
“I may do it. I may not do it,” he said. “I mean, nobody knows what I’m going to do.”
After topping $74 during the morning, the price for a barrel of benchmark U.S. oil dropped to $71.93, down 1.8% from the day before. Brent crude, the international standard, fell 1.9% to $74.96 per barrel.
Oil prices have been yo-yoing for days because of rising and ebbing fears that the conflict could disrupt the global flow of crude. Not only is Iran a major producer of oil, it also sits on the narrow Strait of Hormuz, through which much of the world’s crude passes.
The headline event for the day will likely arrive at 2 p.m. in Washington, when the Federal Reserve is set to announce its latest move on interest rates. The nearly unanimous expectation is that it will hold rates steady, as it’s been doing for all of this year after cutting through the end of 2024.
More important will be what the Fed says about the future. Officials will release projections for where they see the economy, inflation and interest rates heading in upcoming years. The widespread expectation on Wall Street is that the Fed will cut its main interest rate at least two times by the end of 2025, though that has been weakening a bit recently as oil prices have climbed and put upward pressure on inflation.
A cut in rates could make mortgages, credit-card payments and other loans cheaper for U.S. households and businesses, which in turn could give the overall economy a boost. But lower rates can also fan inflation higher.
Besides the threat of higher oil prices because of the fighting between Israel and Iran, the Fed has been concerned about the potential for Trump’s tariffs to both hurt the economy and to drive inflation higher. That’s been the main reason it’s been on hold with interest rates this year.
So far, inflation has remained relatively tame, and it’s near the Fed’s target of 2%. But economists have been saying it may take months more to feel the full effects of tariffs.
A pair of reports on the U.S. economy came in mixed on Wednesday. One said fewer workers applied for unemployment benefits last week, which could be an indication of fewer layoffs. But a second report said that homebuilders broke ground on fewer homes last month than economists expected. That could be a sign that higher mortgage rates are chilling the industry.
On Wall Street, some alternative-energy stocks rose to recover a portion of their sharp losses from the day before, when worries flared about Congress possibly phasing out tax credits for solar and green energy sources. Enphase Energy climbed 4.4% to trim its loss for the week to 20%.
Nucor rose 3.5% after the steelmaker based in Charlotte, North Carolina, said it expects to report growth in profit for all three of its operating groups in the second quarter. It said it benefited from higher selling prices at its sheet and plate mills, among other things.
In the bond market, Treasury yields eased lower ahead of the Fed’s announcement.
The yield on the 10-year Treasury fell to 4.35% from 4.39% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do with its overnight interest rate, dropped to 3.91% from 3.94%.
In stock markets abroad, indexes were mixed across Europe and Asia.
Tokyo’s Nikkei 225 rose 0.9%, and Hong Kong’s Hang Seng fell 1.1% for two of the bigger moves.
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AP Writer Jiang Junzhe contributed.
