By David Hodari and Amrith Ramkumar 
   -- Fed rate announcement, guidance in focus 
 
   -- Bond yields climb 
 
   -- Energy and materials sectors rise 

U.S. stocks inched higher Wednesday, lifted by a rise in commodity prices amid cautious trading leading up to the Federal Reserve's interest-rate decision.

The Dow Jones Industrial Average added 117 points, or 0.2%, to 24845. The S&P 500 climbed 0.4%, while the Nasdaq Composite added 0.3%. All three indexes swung between small gains and losses for the second straight session following sharp declines to start the week.

Energy stocks surged alongside oil prices Wednesday after a weekly report showed U.S. inventories surprisingly decreased during the week ended March 16. The S&P 500 energy sector climbed 2.5%. A rise in metals prices boosted materials stocks, which added 1.6%.

Moves in other sectors were largely muted, with investors focused on the path for higher interest rates ahead of the Fed's interest-rate decision later in the session and the latest news about international trade.

Unease over a pickup in inflation leading to a quicker-than-anticipated pace of rate increases contributed to last month's stock-market correction. Worries that protectionist trade policies could spread following U.S. tariffs and crimp global economic growth have also made some money managers anxious.

"People are waiting to see some sort of clarity and waiting to see, 'Is this kind of just a little bit of a technical selloff, or is this the start of something more substantial?'" said Rob Bernstone, a managing director in equity trading at Credit Suisse Group. "This pullback gives people a little bit of an excuse to take profits and re-evaluate."

Airline stocks were among the worst performers Wednesday following a downbeat revenue forecast from Southwest Airlines, which slid 4.9%. American Airlines Group dropped 2.9%, and Delta Air Lines fell 1.7%.

General Mills dropped 9.1% after it said higher food and shipping costs hurt profitability in the latest quarter and will weigh on the food maker's earnings for the year.

Some investors expect a favorable earnings and economic backdrop to buoy stocks moving forward once the paths for interest rates and trade policies are clarified.

The Fed is widely expected to raise rates for the sixth time since late 2015 later Wednesday, and analysts will be watching for clues about how many more increases to expect the rest of the year. The central bank previously projected three increases for 2018. Some investors worry that higher borrowing costs will slow corporate activity and push up Treasury yields, making stocks less attractive.

Analysts will also be tracking new Fed Chairman Jerome Powell's comments during his press conference for further hints about his long-term outlook for rates.

"The more interesting part [of the announcement] will be the new economic projections and the press conference by the new chairman. I think the market is anticipating a somewhat hawkish view and either a raise in the pace of hikes or a higher long-term Fed funds target rate," said Alvin Tan, a foreign-exchange strategist at Société Générale.

The yield on the benchmark 10-year U.S. Treasury note climbed to 2.905%, according to Tradeweb, from 2.881% Tuesday. Bond yields rise as prices fall. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, declined 0.3%, making commodities and other assets denominated in dollars cheaper for overseas buyers.

Observers were keeping an eye on trade policies with the Trump administration's tariffs on steel and aluminum imports set to go into effect on Friday. The White House is expected to announce a new raft of punitive measures aimed at China, including levies worth at least $30 billion.

Finance ministers from the Group of 20 countries failed to reach a fresh agreement on trade at a meeting this week in Buenos Aires, in a sign that the U.S. and other countries remain split on the matter.

Elsewhere, the Stoxx Europe 600 fell 0.2%, with the index's banking sector among the worst performers. Among individual stocks, home-improvement firm Kingfisher dropped 9% after reporting a sharp fall in full-year profit.

Trading was quiet in Asia, partly because of a Japanese public holiday. Hong Kong's Hang Seng Index fell 0.4%, while China's Shanghai Composite Index was down 0.3%.

Kenan Machado contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

March 21, 2018 12:33 ET (16:33 GMT)

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