NEW YORK CITY, RAW – Wall Street’s main indexes have climbed after two turbulent sessions and ahead of the outcome of a Federal Reserve policy meeting, with a stellar outlook from Microsoft boosting technology stocks.

The Fed policy decision is due later on Wednesday, with the US central bank expected to signal the start of an interest rate hike cycle beginning in March.

The announcement will be followed by Fed Chair Jerome Powell’s news conference, which will be parsed for clues on the magnitude and pace of hikes for the year and strategy for shrinking the central bank’s roughly $US9 trillion ($A13 trillion) balance sheet.

Fed funds futures traders are pricing in a 25 basis point hike in March, in addition to three more rate increases by the end of the year.

“The Fed’s biggest challenge is figuring out how to implement policy measures that are hawkish enough to lower inflation but that also keep financial markets afloat, because volatility in financial markets may bleed into an economy that is already showing signs of slowing,” said Danielle DiMartino Booth, chief executive officer of Quill Intelligence in Dallas.

“The Fed is faced with choosing the lesser of two evils”.

Ten of the 11 major S&P sectors advanced in early trading, with technology and consumer discretionary taking the charge.

Rate-sensitive growth stocks have recently been roiled by fears of aggressive Fed action to combat inflation.

Rising geopolitical tensions around Russia and Ukraine have also weighed on the market, with the S&P 500 index flirting with a correction twice this week.

Microsoft Corp gained 4.8 per cent after estimating current-quarter revenue broadly ahead of market estimates, driven in part by its cloud business.

Chipmaker Texas Instruments Inc rose 4.6 per cent as it also gave a strong outlook.

The broader Philadelphia SE semiconductor index jumped 4.1 per cent.

“When rates rise valuation becomes more important so earnings become more important to save the day. From a market perspective, earnings going forward are going to be better,” said Mike Skillman, CEO of Faith Investor Services in Dallas.

The fourth-quarter reporting season is in full stride.

Analysts expect S&P 500 companies’ earnings to grow 24.4 per cent year-over-year, according to Refinitiv.

In early trading, the Dow Jones Industrial Average was up 506.44 points, or 1.48 per cent, at 34,804.17, the S&P 500 was up 87.40 points, or 2.01 per cent, at 4,443.85, and the Nasdaq Composite was up 356.00 points, or 2.63 per cent, at 13,895.29.

The S&P 500 index is now down nearly 7.3 per cent from its record closing peak on January 3 while the tech-heavy Nasdaq has fallen 13.5 per cent so far this year.

Tesla Inc added 4.6 per cent ahead of its quarterly results after market close.

Barbie maker Mattel jumped 10.2 per cent on winning back rights to make toys based on Disney Princesses from Hasbro Inc .

Advancing issues outnumbered decliners by a 7.29-to-1 ratio on the NYSE and by a 4.83-to-1 ratio on the Nasdaq.

The S&P index recorded 11 new 52-week highs and three new lows while the Nasdaq recorded 20 new highs and 24 new lows.