Stocks showing losses are displayed at the entrance to the New York Stock Exchange (NYSE) in New York City, in New York, U.S., February 24, 2022.
Stocks showing losses are displayed at the entrance to the New York Stock Exchange (NYSE) in New York City, in New York, U.S., February 24, 2022. Reuters / CAITLIN OCHS

U.S. stock indexes rose on Wednesday after a bruising start to the week, as Federal Reserve Chair Jerome Powell signaled the central bank would start raising rates this month despite uncertainties stemming from the Ukraine crisis.

In prepared remarks for his testimony to the U.S. House of Representatives Financial Services Committee, Powell reiterated the core Fed narrative that high inflation and an "extremely tight" labor market warrant higher interest rates.

Powell will testify before U.S. lawmakers at 10 a.m. ET (1500 GMT).

"It's in line with what was expected," said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

"If anything, I thought he was comforting and sober about the realities of the geopolitical risks and that the Fed would be nimble and effectively tactical about how they move forward and take everything into account versus just moving ahead with some predetermined plan."

Traders now see a 5% probability of a 50 basis point rate hike by the Fed at its March meeting and 95% probability of 25 basis point hike. [IRPR]

All the 11 major S&P sectors advanced in early trading, with financials rebounding 1.2% after falling sharply so far this week. The banks index climbed 1.4%, after hitting its lowest level since Sept 2021 in the previous session.

Energy shares resumed their march higher, up 1.8% as Brent crude jumped to near eight-year highs after Western sanctions disrupted transport of commodities exported by Russia.

Wall Street indexes closed sharply lower on Tuesday with financial stocks bearing much of the damage as investors weighed the impact of harsh sanctions against Russia over its invasion of Ukraine.

"This market is facing two critical tests right now: one is the Federal Reserve and how they will address inflation and the other is (the) war in Eastern Europe, and when we think about both those things, they're interrelated," Art Hogan, chief market strategist at National Securities.

Meanwhile, data showed U.S. private employers hired more workers than expected in February as the labor market recovery gathered steam.

Russia said its forces took control of the first sizable city, seizing Kherson, in south Ukraine, as fighting raged around the country. Kremlin said its delegations are ready to hold a second round of talks with Ukraine.

At 9:39 a.m. ET, the Dow Jones Industrial Average was up 193.12 points, or 0.58%, at 33,488.07, the S&P 500 was up 24.34 points, or 0.57%, at 4,330.60, and the Nasdaq Composite was up 40.26 points, or 0.30%, at 13,572.72.

Among other stocks, Nordstrom Inc surged 31.5% after the department store chain forecast upbeat full-year revenue and profit.

Advancing issues outnumbered decliners by a 2.33-to-1 ratio on the NYSE and by a 1.55-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and two new lows, while the Nasdaq recorded 14 new highs and 43 new lows.