By Tanya Agrawal
(Reuters) - Wall Street was higher in afternoon trading on Wednesday as the prospect of higher interest rates set off a rally in financial stocks that countered a fall in retail shares.
The minutes from the Federal Reserve's April meeting, scheduled to be released at 2 p.m. ET (1800 GMT), could give clues on the path of rate hikes.
"There may be some nugget in the minutes that confirms what two Fed governors mentioned yesterday," said Mark Lucchini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Dallas Fed President Robert Kaplan said on Tuesday he will advocate for a hike in June or July. Two other Fed officials said they expect up to three increases this year.
"If others insinuate the same, that could set the market up again for some rough activity," Luschini said.
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The central bank meets on June 14-15 but chances of a hike in June are slim. Traders see a 58 percent probability of a rate hike after the Fed's November meeting, up from about 42 percent on Monday, according to the CME FedWatch tool.
April data on Tuesday showed the biggest rise in U.S. consumer prices in more than three years, while housing starts and industrial production rebounded.
The strong data and a recovery in oil prices to seven-month highs have stoked expectations that inflation will rise further. The Fed has a 2 percent inflation target.
At 13:25 p.m. ET, the Dow Jones industrial average was up 99.44 points, or 0.57 percent, at 17,629.42, the S&P 500 was up 12.44 points, or 0.61 percent, at 2,059.65 and the Nasdaq Composite was up 44.44 points, or 0.94 percent, at 4,760.17.
Apple's 1.75 percent rise provided the biggest boost to the S&P and the Nasdaq, while Goldman Sachs' 2.6 percent jump lifted the Dow.
Five of the 10 major S&P sectors were higher, with the financial index's <.SPSY> 1.81 percent rise leading the advancers. JPMorgan's 3.2 percent rise provided the biggest boost to the sector.
Retail stocks, which were roiled last week following poor results from department stores, remained under pressure after Target fell 7.1 percent to $68.31 as its quarterly sales missed expectations.
The consumer staples <.SPLRCS> led the laggards with a 0.52 percent fall.
Dow-component Wal-Mart Stores , which reports results on Thursday, was also down 2.3 percent at $63.60. Costco Wholesale slipped 1.7 percent to $141.12.
Hormel Foods was down 8.4 percent at $35.56 after the company's profit came missed market estimates.
Tesla Motors was up 3.6 percent at $211.98 after Goldman Sachs upgraded the electric car maker's stock to "buy" from "neutral."
Goldman Sachs on Tuesday downgraded equities to "neutral" over a 12-month time-frame, saying, "until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk."
Advancing issues outnumbered decliners on the NYSE by 1,639 to 1,231. On the Nasdaq, 1,824 issues rose and 891 fell.
The S&P 500 index showed six new 52-week highs and seven new lows, while the Nasdaq recorded 19 new highs and 41 new lows.
(Reporting by Tanya Agrawal and Yashaswini Swamynathan; Editing by Don Sebastian)