Wall Street modestly higher in rebound from selloff

Investors continue to focus on when the Federal Reserve would adjust its rate policies

US stocks rose modestly on Wednesday in a partial rebound from the previous session's sharp decline, though investors continued to focus on when the Federal Reserve would adjust its rate policies.

Wall Street fell sharply on Tuesday, with the S&P 500 suffering its biggest one-day decline in two months, surpassing a selloff of similar magnitude on Friday. The weakness came on the increasing view the Fed may raise interest rates as soon as June.

Those worries pushed the U.S. dollar to a nearly 12-year peak against the euro on Tuesday and added to concerns the dollar will continue to weigh on U.S. multinationals' earnings.

The U.S. dollar index stayed strong Wednesday, up 0.7 percent. It has risen in five of the past six sessions, up more than 4 percent over that period. The euro fell 1 percent to a 12-year low.

"The reason the Fed would raise rates is because growth dynamics are picking up, which would ultimately be a tailwind for markets, though markets will likely challenge that view with volatility," said Jeremy Zirin, chief equity strategist of wealth management at UBS in New York.

"We remain constructive that equities will grind higher over the course of 2015, but there will be some volatility based on any changes to the view of when the Fed will announce its first rate hike."

Despite the recent weakness, which took the Dow and S&P into negative territory for the year on Tuesday, the S&P is just 3.3 percent from a record close hit earlier this month. It is also near its 100-day moving average of 2,040.27. If the S&P breaks below that level, that could signal weak medium-term momentum.

U.S. crude futures were volatile on Wednesday, rising as much as 1.6 percent before turning negative. While oil is up more than 10 percent from a bottom reached in late January, it remains down more than 55 percent from a June high.

"Oil is still trying to find a near-term equilibrium, and right now there's too much oversupply to turn prices around," Zirin said. "There's more risk to the downside than the upside."

Sandisk Corp rose 5.5 percent to $84.59 as the S&P 500's biggest percentage gainer after Goldman Sachs added the company to its Conviction Buy list.

Express Inc rose 3.7 percent to $15.50 after fourth-quarter earnings and sales topped expectations.

At 9:58 a.m. (1358 GMT), the Dow Jones industrial average rose 43.15 points, or 0.24 percent, to 17,706.09, the S&P 500 gained 3.63 points, or 0.18 percent, to 2,047.79 and the Nasdaq Composite added 10.07 points, or 0.21 percent, to 4,869.87.

Advancing issues outnumbered declining ones on the NYSE by 1,531 to 1,184, for a 1.29-to-1 ratio; on the Nasdaq, 1,378 issues rose and 890 fell, for a 1.55-to-1 ratio favoring advancers.

The S&P 500 was posting 5 new 52-week highs and 8 new lows; the Nasdaq Composite was recording 31 new highs and 40 new lows.