Wall Street higher on tech gains; Fed decision awaited

By Rama Venkat Raman and Sruthi Shankar

(Reuters) - U.S. stocks inched higher on Wednesday powered by technology stocks but shares of big banks lost steam ahead of a widely-expected interest rate hike in the afternoon.

Tech stocks lifted major Wall Street indexes, with Apple and Facebook rising about 1 percent each.

Shares of JPMorgan and Bank of America fell about half a percent each, dragging down the financial stocks as U.S. Treasury yields fell on the back of a disappointing November inflation report.

The markets appear to have already priced in a 25 basis points interest rate hike and investors are eager to know how the Federal Reserve would balance a stimulus-fueled boost to the economy by Trump's tax-cut plan with benign inflation and tepid wage growth.

"We don't know the details of the tax plan but we know that there will be one. The Fed will feel very comfortable given the good growth, stable inflation. Tax code stimulus should provide the Fed additional confidence in 2018," said Stephen Wood, chief market strategist at Russell Investments in New York.

A Labor Department report showed underlying consumer inflation slowed in November amid weak healthcare costs and the biggest drop in apparel prices since 1998.

At 10:53 a.m. ET (1553 GMT), the Dow Jones Industrial Average was up 109.74 points, or 0.45 percent, at 24,614.54 and the S&P 500 was up 6.13 points, or 0.23 percent, at 2,670.24. The Nasdaq Composite was up 27.91 points, or 0.41 percent, at 6,890.22.

Investors also assessed Democrat Doug Jones' victory in a bitter fight for a U.S. Senate seat in deeply conservative Alabama on Tuesday.

A Jones victory could mean trouble for Trump's policy agenda as it narrows the Republicans' already slim majority in the Senate.

Jones is expected to take office in early January. Though his election will not effect the pending votes in Congress on a tax overhaul, it could add pressure on Republicans to get the bill through before the year end.

"With a less Republican seat in Alabama, that is going to expedite the Congress and the Senate to pass the tax bill before the year end, probably by next week," said Peter Cardillo, chief market economist at First Standard Financial.

"It could be on Trump's desk, so that's going to keep the stock market positive."

Among big movers, Western Digital gained more than 3 percent and was the biggest tech gainer after the company agreed to settle a dispute with Toshiba.

Shares of Finisar soared about 30 percent after Apple said it would invest $390 million in the chipmaker to help make chips to power iPhone features.

Advancing issues outnumbered decliners on the NYSE by 1,718 to 1,045. On the Nasdaq, 1,858 issues rose and 880 fell.

(Reporting by Rama Venkat Raman and Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)