Investing.com – Wall Street traded higher on Wednesday as service sector activity gave a solid read with oil soaring 2% on inventory data and despite the fact that markets raised the odds of the Federal Reserve (Fed) hiking rates.
At 11:36AM ET (15:36GMT), the Dow Jones jumped 109 points, or 0.60%, the S&P 500 gained 10 points, or 0.0646 and the tech-heavy Nasdaq Composite traded up 31 points, or 0.58%.
On the back of largely upbeat data and recent hawkish comments from Fed officials, the odds for monetary policy tightening rose on Wednesday, pushing the dollar higher.
According to Investing.com's Fed Rate Monitor Tool, Fed fund futures currently price in a 15.5% chance of a hike at the November meeting, compared to just 10.3% last week.
With many analysts of the opinion that an increase just days before the U.S. elections would be unlikely, markets continued to focus on the end of the year for the Fed to continue with policy normalization.
Odds for a hike at the December meeting had risen to 59.8%, compared to just 53.1% a week ago.
Overall, data out Wednesday pushed the probability up. Most notably, service sector activity in September hit an 11-month high in what was its 80th consecutive month of growth, while both prices and employment also moved up.
In other positive news, factory orders unexpectedly rose 0.2% in August, beating analyst forecasts for a 0.1% decline.
Disappointing market expectations, the ADP nonfarm employment figures showed the creation of only 154,000 jobs, missing forecasts for an increase of 166,000.
Still, some slowing in job creation is to be expected as the U.S. economy reaches full employment and the average increase is well within the Fed’s target rage.
Meanwhile, the balance of hawkish Fed comments continued to grow.
Late Tuesday, Chicago Fed president Charles Evans said he would be “fine” with a rate hike by the end of this year.
On Wednesday, Minneapolis Fed chief Neel Kashkari’s speech steered clear of comments on the economy or monetary policy.
Still ahead, Richmond Fed president Jeffrey Lacker was scheduled to speak.
On Tuesday, Lacker already said there was strong case for a “pre-emptive” hike now and argued that current levels of inflation and unemployment would, historically, warrant interest rates of at least 1.5%, compared to the current range of 0.25% to 0.50%.
Meanwhile, oil prices surged more than 2% on the back of a surprise draw in U.S. crude stockpiles.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 2.976 million barrels in the week ended September 30. Market analysts' expected a crude-stock gain of 2.56 million barrels.
U.S. crude oil futures surged 2.30% to $49.81 by 11:38AM ET (15:38GMT), while Brent oil jumped 2.04% to $51.91.