U.S. stocks climb as Fed decision nears

Wall Street stocks climbed Wednesday, keying off rises in global equities after the Bank of Japan overhauled its monetary policy framework, and with a Federal Reserve interest-rate decision ahead.

The BOJ kept its deposit rate unchanged at negative 0.1%. It also introduced a zero interest-rate target for 10-year government bonds, part of what analysts are calling “yield curve control.”

BOJ’s decision spurred a global equity rally, including on Wall Street.

The S&P 500 SPX, +0.38%  added 10 points, or 0.5%, to 2,149, with gains across all the main sectors. Energy shares led advancers, up 0.7%, thanks to a jump in crude-oil prices.

The Dow Jones Industrial Average futures DJIA, +0.32%  rose 80 points, or 0.5%, to 18,215 with 27 of the 30 blue-chip companies trading higher. Goldman Sachs Group GS, +0.67% and 3M Co. CAT, +1.08%  were contributing the most to blue-chip gains. Meanwhile the Nasdaq Composite Index COMP, +0.38%  advanced 24 points, or 0.5%, to 5,265.

“The moves on Wall Street today will be a function of moves in the 10-year Treasury yields and whether the U.S. dollar will stay steady after the “hawkish hold” by the Fed,” Quincy Krosby, said market strategist, at Prudential Financial.

Fed in the spotlight: With most analysts not expecting a change in U.S. interest rates, the talking point will be the Federal Open Market Committee’s accompanying statement. Another will be whether the Fed hints at future policy changes, now the odds of a December Fed rate increase have risen to 58%, said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

The big risk to a more hawkish Fed is the dovish stance seen across the globe, she argued.

“As the Bank of Japan, the European Central Bank and the Bank of England display an ultra-expansive stance, the Reserve Bank of Australia and New Zealand leave the door open for more action if needed, it is difficult for the Fed to act alone,” she said.

The decision from the Fed is due at 2 p.m. Eastern Time, followed by a news conference with Chairwoman Janet Yellen.

BOJ sparks global gains: That upbeat sentiment spread to Europe, where banks also rallied, lifting the Stoxx Europe 600 SXXP, +0.57%  up 0.9%. Financial stocks rallied in Tokyo, with the Nikkei 225 index NIK, +1.91%  closing 1.9% higher. Japan’s 10-year sovereign bond TMBMKJP-10Y, +62.02%  briefly hit 0% on Wednesday, for the first time since March, before falling back in negative territory.

“A steeper yield curve provides the motivation for banks to encourage customers to borrow, and is typically associated with a strengthening economy,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, in a note.

As financial companies tend to borrow short and lend long, the BOJ announcement provided “rocket fuel” for Japan banks to rally, O’Keeffe said.

The Japanese yen initially sold off after the announcement, but has since rebounded. Against the dollar, the yen USDJPY, -1.06%  last traded at ¥100.916 after closing late Tuesday in New York at ¥101.72.

“All told, I believe the BOJ’s pledge to keep policy loose not only until they achieve their inflation target, but until they overshoot their target on a sustainable level, is the most radical thing I’ve heard from a central bank,” said Marshall Gittler, head of investment research at FXPrimus, in a note to clients.

In the long term, Gittler said, that should weaken the yen because it “promises they will just keep on trying and trying. But in the short term, I’d say a lot depends on what the Fed decides tonight.”

Stocks to watch: FedEx Corp. FDX, +6.29%  jumped after the package-delivery giant’s adjusted earnings and revenue topped forecasts. That is even as the company cut its outlook to help integrate its TNT Express NV acquisition.

General Mills Inc. GIS, -0.39%  shares fell slightly after the company reported sales that fell short of its targets.

Shares of Viacom Inc. VIAB, +1.36% VIA, +1.11% fell about 0.5% after the beleaguered company issued a profit warning, forecasting adjusted earnings per share for the fourth quarter will be in the range of 65 cents to 70 cents.

CarMax Inc. KMX, -2.73%  shared plunged 5% after the used car seller reported disappointing fiscal second-quarter results. Bed, Bath and Beyond Inc. BBBY, -0.19%  will report after the close.

Microsoft Corp. MSFT, +1.21%  late Tuesday said it would increase its quarterly dividend by 8% over the previous quarter, and it approved a share buyback program of up to $40 billion. Shares of the technology group rose 1.3%.

Other markets: WTI crude CLX6, +2.25%  added 80 cents, or 1.8%, to $44.84 a barrel, on hopes that major oil producers could be nearing agreement on a deal to cap output. Oil prices were also lifted after the American Petroleum Institute said late Tuesday that its own data for the week showed a 7.5-million-barrel decrease in crude supplies.

API data comes ahead of the all-important Energy Information Administration report on U.S. supplies later Wednesday.

Gold prices GCZ6, +0.90%  were aiming for a third-straight win as the dollar wavered.