June 18 (Reuters) - Wall Street's main indexes rose on Wednesday, as the focus shifted from escalating hostilities in the Middle East to the Federal Reserve's monetary policy decision expected later in the day.
A nearly 2% fall in oil prices also boosted equities midday after U.S. President Donald Trump said Iran wanted to negotiate.
Investors will closely monitor Fed Chair Jerome Powell's comments to gauge how he plans to combat the risk of rising prices, which remains a dominant concern for the central bank. The Fed is expected to leave rates unchanged at its meeting.
"Trade tensions have come down somewhat compared to the last time the FOMC met," but it remains to be seen whether the Fed will adjust its commentary or expectations in relation to the inflationary impact of tariffs, said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management.
Ahead of the monetary policy decision, money market moves show traders are pricing in about 47 basis points of rate cuts by the end of 2025, with a 56% chance of a 25-bps rate cut in September, according to CME Group's FedWatch tool.
Following strong monthly equity trading in May, the benchmark S&P 500 index (.SPX), and the Nasdaq (.IXIC), were close to record peaks before the ongoing conflict in the Middle East made investors risk averse.
The S&P 500 index stood 2.3% below its record level, and the tech-heavy Nasdaq (.IXIC), remained 2.7% lower.
Investors have been anxious over the possibility of a more direct U.S. military involvement in the Israel-Iran aerial war.
A source familiar with internal discussions said U.S. President Donald Trump and his team were considering a number of options, which included joining Israel in strikes against Iranian nuclear sites.
At 11:36 a.m. ET, the Dow Jones Industrial Average (.DJI), rose 168.44 points, or 0.40%, to 42,384.24, the S&P 500 (.SPX), gained 23.78 points, or 0.40%, to 6,006.50 and the Nasdaq Composite (.IXIC), gained 107.85 points, or 0.55%, to 19,628.94.
Ten of the 11 major S&P 500 sub-sectors rose. Energy (.SPNY), stocks declined 0.6%, while consumer discretionary (.SPLRCD), led gains with a nearly 1% rise.
Among megacap stocks, shares of Tesla (TSLA.O), gained 2.7%.
Shares of networking and custom AI chipmaker Marvell Technology (MRVL.O), hit a three-month high and were last up 7%.
Shares of stablecoin issuer Circle Internet (CRCL.N), rose over 16% after the U.S. Senate passed a bill to create a regulatory framework for dollar-pegged cryptocurrency tokens known as stablecoins.
Steelmaker Nucor (NUE.N), rose 3.6% following a second-quarter profit forecast that came above analysts' estimates.
Initial jobless claims data on Wednesday showed the number of Americans filing new applications for unemployment benefits fell last week, but stayed at levels consistent with a further loss of labor market momentum in June.
Advancing issues outnumbered decliners by a 2.89-to-1 ratio on the NYSE and by a 2.44-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and six new lows, while the Nasdaq Composite recorded 55 new highs and 71 new lows.
Reporting by Kanchana Chakravarty and Sukriti Gupta in Bengaluru; Editing by Shinjini Ganguli
