By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks were higher shortly after the open on Wednesday, following a three-session losing streak for major Wall Street indexes, as investors awaited the U.S. Federal Reserve's final statement of the year that may set the stage for interest rate hikes in 2015.
A strengthening U.S. economy is expected to trump global economic worries and the Fed is likely to signal it is still on track to raise rates.
U.S. consumer prices recorded their biggest drop in nearly six years in November as gasoline prices tumbled, but this probably will do little to change views the Fed will start raising interest rates in mid-2015.
"I do think they will take in consideration slow global economic activity and perhaps mention the threat of deflation in Europe," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"If there isn't a change in language, that would be the surprise," he said, adding that as the U.S. economy continues to strengthen and lower oil prices give a boost to the consumer "the year-end rally in stocks will resume."
The Fed's statement is due at 2:00 p.m. (1900 GMT) and will be followed by a news conference by Chair Janet Yellen half an hour later.
The Dow Jones industrial average rose 88.72 points, or 0.52 percent, to 17,157.59, the S&P 500 gained 12.76 points, or 0.65 percent, to 1,985.5 and the Nasdaq Composite added 24.43 points, or 0.54 percent, to 4,572.26.
Volcano Corp shares jumped 54.9 percent to $17.80 after Philips agreed to buy the medical device maker for $1.2 billion including debt.
FedEx shares dropped 5.3 percent to $165.07 after the package delivery company reported lower-than-expected quarterly profit. The stock was the biggest weight on both the S&P 500 and Dow Jones Transportation Average, which lost 1.2 percent.
General Mills advanced 1.1 percent to $51.70 after he maker of Cheerios cereal and Betty Crocker cake mixes posted better-than-expected quarterly results and reaffirmed its full-year outlook.
The Herzfeld Caribbean Basin Fund surged 17.6 percent to $8.01 ahead of a statement by U.S. President Barack Obama in which a shift in policy towards Cuba is expected.
Advancing issues outnumbered declining ones on the NYSE by 2,075 to 739, for a 2.81-to-1 ratio; on the Nasdaq, 1,596 issues rose and 725 fell for a 2.20-to-1 ratio favoring advancers.
The S&P 500 was posting 5 new 52-week highs and 10 lows; the Nasdaq Composite was recording 13 new highs and 46 lows.
(Additional reporting by Rodrigo Campos; Editing by Nick Zieminski)
