By Tanya Agrawal
REUTERS - Wall Street was higher in afternoon trading on Wednesday, extending gains from Tuesday as oil prices rose and investors became more comfortable with the prospect of an interest rate hike as early as next month.
The S&P financial index was up 0.95 percent, after hitting its highest this year in morning trading. Bank of America, JPMorgan and Citigroup were up between 1.5 and 2 percent.
Comments from policymakers in recent days and upbeat U.S. economic data have raised expectations that the Federal Reserve could pull the trigger on a rate increase much sooner than previously thought.
Traders are now pricing in a 38 percent chance for a rate hike in June and 45 percent in July, according to CME Group's FedWatch tool.
The Fed last raised its key interest rate in December by quarter of a percentage point to between 0.25 and 0.5 percent.
"Wall Street is getting a little bit more comfortable with a hike and knowing that the sun will rise even after the Fed hikes rates," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
"The recent economic data suggests that the economy is better, but continues to be uneven."
Energy shares rose as oil prices hovered near $50 a barrel for the first time in seven months on expectations of shrinking supply. Chevron was up 1.21 percent.
At 13:15 p.m. ET (1715 GMT) the Dow Jones industrial average was up 163.74 points, or 0.92 percent, at 17,869.79, the S&P 500 index was up 16.89 points, or 0.81 percent, at 2,092.95 and the Nasdaq composite index was up 42.03 points, or 0.86 percent, at 4,903.08. The gains were broad-based, with nine of the 10 major S&P sectors trading higher.
The S&P 500, which has risen about 15 percent since its February lows, is up about 2 percent for the year.
Shares of Computer Sciences soared 34.5 percent to $47.90 after Hewlett Packard Enterprise said it would spin off and merge its struggling IT services business with the company. Hewlett Packard Enterprise was up 9.1 percent at $17.73.
Alibaba Group was down 4.7 percent at $77.34 after the company said it was being investigated by the U.S. Securities and Exchange Commission over whether its accounting practices violated any federal laws. Yahoo, in which Alibaba own a stake, was down 2.8 percent at $36.49.
Advancing issues outnumbered decliners on the NYSE by 2,047 to 895. On the Nasdaq, 1,852 issues rose and 891 fell.
The S&P 500 index showed 34 new 52-week highs and no new lows, while the Nasdaq recorded 84 new highs and 15 new lows.
(Reporting by Tanya Agrawal; Editing by Anil D'Silva)
