U.S. stocks are rising as investors await Fed's interest rate decision

May 3, 2023 10:27 AM EDT -- U.S. stocks were drifting higher ahead of the Federal Reserve’s announcement about interest rates later today.

At 10:05 ET (14:05 GMT), the Dow Jones Industrial Average was up 47 points or 0.1%, while the S&P 500 was up 0.3% and the NASDAQ Composite was up 0.4%.

Stocks sank on Tuesday in anticipation of the decision, which many expect to be another increase to the benchmark interest rate, by a quarter of a percentage point. The Fed is still fighting inflation despite signs that the economy is weakening.

At the same time, regional banks have been in turmoil amid a crisis of confidence in the banking system, though shares are rebounding on Wednesday. PacWest Bancorp (NASDAQ: PACW) shares are up 12% in early trading, while shares of Western Alliance Bancorporation (NYSE: WAL) are up more than 4%.

While the Fed is expected to raise rates today, the expectation is it will pause at its June meeting to assess the effects of its actions so far to tame inflation. It wants to see strong evidence that inflation is heading back to its 2% target rate.

The labor market is another factor the Fed is weighing. Earlier this morning, the ADP private payroll report showed the economy added more jobs than expected in April. A more comprehensive report on jobs last month is due out on Friday.

Shares of Advanced Micro Devices (NASDAQ: AMD) fell 7.9% after saying current quarter sales could be below expectations. Eli Lilly and Company (NYSE: LLY) shares rose 4% after tests showed its Alzheimer's treatment slowed the progression of the disease.

Kraft Heinz Co. (NASDAQ: KHC) shares rose 4.4% after the macaroni and cheese maker raised its full-year profit outlook after beating first quarter expectations.

Oil was falling. Crude Oil WTI Futures was down 4% to $68.69 a barrel, while Brent Oil Futures crude was down 3.9% to $72.37 a barrel. Gold Futures was up 0.1% to $2,025.

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