Traders brace for Fed rate decision as stocks near record highs

U.S. stock markets drifted in a narrow range on Wednesday as traders awaited the Federal Reserve's afternoon decision on interest rates.

The S&P 500 index gained 0.2%, moving within 1% of the all-time high set earlier this month. The Dow Jones Industrial Average was up 31 points, or 0.1%, at 9:35 a.m. Eastern time. The Nasdaq composite rose 0.3%.

The central focus for investors is the Fed's guidance on the future path of rates. The central bank raised its main interest rate last month for the first time in three years. It acted to slow high inflation that is pressuring the economy and consumers.

Wall Street broadly expects the Fed to leave the federal funds rate unchanged at this meeting. The key question is whether the bank will offer clues about future moves. Fed Chairman Kevin Warsh has stated he wants the Fed to provide fewer indications of its future actions.

Interest rates influence stock prices by affecting borrowing costs and corporate earnings. More companies reported summer earnings that beat analyst expectations on Wednesday. GE Healthcare Technologies shares jumped 8% after its profit and revenue exceeded forecasts. The company also raised its full-year revenue growth targets.

Etsy stock climbed 6.6% after its quarterly profit surpassed analyst estimates. CEO Kruti Patel Goyal noted that active buyers grew from prior-year levels for the first time in two years. The active seller base also grew at its fastest rate in two years.

Shares of AI companies remained steady. This stability followed recent volatility driven by concerns that high borrowing costs would hurt AI data center construction. SK Hynix stock soared 10.9% in Seoul after reporting strong profits. The memory chip maker said demand is expected to outpace supply through 2030.

Micron Technology jumped 5.2% on Wall Street, providing the biggest boost to the S&P 500. Robinhood Markets fell 3.2% after reporting weaker profit and revenue than expected. Boston Scientific dropped 11.1% despite a smaller profit decline than forecast, as its current-quarter profit outlook missed analyst expectations.

The yield on the 10-year Treasury held steady at 4.99%. This level is near the high end of its recent range. It rose from 3.97% before the war with Iran drove up oil prices and inflation worries. The yield had topped 5.30% earlier this month, hitting its highest level since 2002.

Brent crude oil prices rose 1.8% to $111.33 per barrel. This increase reflects ongoing uncertainty in the Middle East and the global energy sector. South Korea's Kospi index led global markets with a 6.6% jump. Japan's Nikkei 225 rose 1.1%, and France's CAC 40 added 0.2%.