The S&P 500 rose on Wednesday as investors awaited a policy announcement from the Federal Reserve later in the day.

The broad market index was trading 0.7% higher, while the Nasdaq Composite was up about 1%. The Dow Jones Industrial Average was up 236 points, or about 0.6%.

The Fed is scheduled to deliver its latest policy decision at 2 p.m. ET. While the Fed is widely expected to hold rates steady, investors will be looking to see if the central bank maintains its outlook for two rate cuts this year. They will also be listening to Fed Chair Jerome Powell for clues on how he sees the economy amid rising tensions between the U.S. and its major trading partners.

"I think there's a general recognition that Powell's language is going to be conciliatory to what we saw in December and January, which is the idea that we've made tremendous progress in fighting inflation," Michael Green, chief strategist at Simplify Asset Management, told CNBC.

Green shares the consensus view that the central bank is unlikely to cut rates at this meeting, but is likely to do some rate cuts over the rest of the year.

"Everything they're going to try to do at this meeting is designed to reduce the uncertainty and the tension around what Trump is going to do on April 2nd," he continued.

Along with its policy decision, the Fed will unveil its quarterly projections for GDP, unemployment and inflation. On Wednesday, Bank of America CEO Brian Moynihan said on CNBC's "Squawk Box" that the economy is "holding up better than people expected."

Investors are coming off a bad Tuesday, which saw the recent market selloff return in full force after two winning sessions.

The Dow fell 0.6%, while the S&P 500 fell more than 1%. The broad market index closed down 8.6% from its record close in February. The Nasdaq fell 1.7%. (Newsmaker23)

Source: CNBC