Stocks Climb Ahead of Anticipated Fed Rate Increase

The gains were broad-based, with nine of the S&P 500’s 11 sectors rising. Shares of tech companies were among the biggest gainers.

Fed Chairman

Jerome Powell

has said he would propose a quarter-percentage-point rate increase—which would be the first rise since 2018—at the central bank’s meeting Wednesday as officials look to cool demand and control inflation. The central bank is navigating an unusually complicated environment of a tight labor market, supply disruptions, spiraling inflation, Russia’s invasion of Ukraine and Covid-19 lockdowns in China—the latter two of which are likely to compound inflationary and supply-chain issues. 

Bond yields rose ahead of the Fed meeting. The yield on the benchmark 10-year Treasury note ticked up to 2.169% from 2.160% Tuesday. Yields and prices move inversely. The sharp climb in bond yields reflects investors’ growing bets that Russia’s invasion of Ukraine won’t slow the momentum toward higher interest rates. 

“I would be absolutely shocked it it were anything other than a 25 basis point increase,” said

Scott Wren,

senior global market strategist for Wells Fargo Investment Institute.

The clouded global picture has injected fresh uncertainty into how aggressively central banks will tighten policy the rest of this year. Investors will be looking for clues to this question when the Fed releases its monetary policy statement at 2 p.m. ET. The U.K.’s Bank of England meets Thursday.

U.S. retail-sales data for February showed increased spending from the month prior as households adapt to the crosscurrents of a strong labor market, falling coronavirus cases and inflation running at the highest annual rate in 40 years.

Oil prices were muted as investors weighed whether lockdowns in some Chinese cities will sap demand for energy even as Russia’s invasion of Ukraine has bolstered concerns of supply disruptions. Brent-crude futures, the international benchmark, edged down 1.7% to $98.25 a barrel. Elevated oil prices have prompted concerns that the U.S. and Europe could see sustained inflation and lower economic growth, as higher gas and energy prices eat away at household spending on other goods and services. 

Chinese officials said they would “coordinate pandemic prevention and control and economic development, keep the economy operating within a reasonable range and keep the capital market running smoothly,” according to a report on Wednesday by Xinhua, China’s state news agency. This helped soothe some fears over an economic slowdown in China that would also sap growth globally. 

Technology stocks led a blistering rebound in Chinese markets after supportive comments from Beijing policy makers. Hong Kong’s Hang Seng Index soared 9.1%, led by gains in technology stocks. China’s Shanghai Composite climbed 3.5%. 

The KraneShares CSI China Internet ETF soared 28% in trading after falling to a record low earlier in the week.

“The bounceback in Chinese equities shows you how sensitive the markets are,” said

Peter Garnry,

head of equity strategy at Saxo Bank, noting wide swings in markets in recent weeks as investors watch headlines on a number of events. 

Overseas, the pan-continental Stoxx Europe 600 climbed 3.2%, led by a jump in its technology sector. Russia’s stock market remains closed through the rest of the week.

—Joe Wallace contributed to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com