By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks climbed in early afternoon trading on Wednesday as energy sector shares surged more than 4 percent, though investors were preparing for a Federal Reserve statement that may set the stage for interest rate hikes in 2015.
If the market ends higher, it would break a three-day streak of losses.
A strengthening U.S. economy is expected to trump global economic worries for the Fed, which is likely to signal it is still on track to raise rates. Many investors were devoting attention to whether the central bank drops its longstanding view that it would wait a "considerable time" before raising rates.
"Volatility should be expected after the statement because so much is riding on two words, which in some respects speaks to the dysfunction of the market," said Peter Kenny, chief market strategist at Clearpool Group in New York. "But that said, markets have an enormous amount of confidence in the Fed and the Fed's ability to navigate through troubled waters."
The S&P energy sector, which has fallen sharply with the heavy selloff in oil prices since June, was up 4.3 percent, leading gains on the benchmark index.
The Fed's statement is due at 2:00 p.m. EST (1900 GMT) and will be followed by a news conference by Chair Janet Yellen half an hour later.
At 1:03 p.m., the Dow Jones industrial average was up 151.05 points, or 0.88 percent, at 17,219.92, the S&P 500 gained 21.18 points, or 1.07 percent, to 1,993.92, and the Nasdaq Composite added 38.03 points, or 0.84 percent, to 4,585.87.
Shares of the Herzfeld Caribbean Basin Fund, which holds stocks and assets that fund manager Thomas Herzfeld believes would benefit from an eventual end to the U.S. economic embargo against Cuba, hit a seven-year high as President Barack Obama announced a move to normalize relations between the United States and Cuba. The fund was last up 32 percent.
Also following the announcement, shares of cruise line operator Carnival Corp were up 2.8 percent.
FedEx shares dropped 4.7 percent after the package delivery company reported lower-than-expected quarterly profit.
Advancing issues outnumbered declining ones on the NYSE by 2,474 to 565, for a 4.38-to-1 ratio on the upside; on the Nasdaq, 1,961 issues rose and 714 fell for a 2.75-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting seven new 52-week highs and 10 new lows; the Nasdaq Composite was recording 23 new highs and 70 new lows.
(Additional reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Peter Galloway)
