S&P 500 rises after Fed minutes show the central bank could hike rates further than expected

The S&P 500 rose slightly on Wednesday after the minutes of the Federal Reserve's policy meeting from earlier this month showed the central bank is prepared to raise rates further than the market had anticipated.

The broad market index added 0.6%, while the Nasdaq Composite advanced 1.1%, after posting a steep loss in the previous session. The Dow Jones Industrial Average moved higher by 34 points, or 0.1%, after being the only major index to finish in the green, albeit slightly, on Tuesday.

The minutes from the Fed's meeting showed officials saw the need to raise rates quickly, and possibly more than the market has priced in, to quell the recent inflationary pressures.

"Most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings," the minutes stated. In addition, Federal Open Market Committee members indicated that "a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook."

The yield on the 10-year U.S. Treasury note was little changed following the release, stalled at 2.752%.

Investors cheered the Fed taking more aggressive action to break inflation. Recently, fears of higher rates have shifted to fears of a recession as investors grapple with high-flying inflation that needs to be tamed.

"With market devoid of major catalysts, earnings reports and macro takeaways remain in focus, particularly retailers, which have sold off precipitously on cracks in consumer demand and rapid spending mix shift," said Ross Mayfield, investment strategy analyst at Baird. "The Fed is committed to a near-term rate and quantitative tightening path, with a goal to soften demand and moderate inflation without inducing a recession."

Nordstrom shares jumped more than 11% Wednesday after the retailer surpassed sales expectations and raised its full-year outlook. Dick's Sporting Goods gained 9% after topping earnings and revenue estimates for its fiscal first quarter.

Best Buy climbed 8% despite getting a downgrade from Barclays, which followed a mixed earnings report Tuesday in which the electronics retailer cut its yearly outlook.

Retailer names led the market higher after it opened in the red, following a report that bidders are still competing to acquire Kohl's, whose shares jumped 12% The SPDR S&P Retail ETF gained 6%.

Retailers have been on an earnings spree since last week that has held the attention of investors anxious to see how companies are managing sky-high inflation. Investors and analysts have pointed out that what has so far been a retail wreck reflects a shift in consumers' demand for services rather than goods, and some have suggested stocks may be getting overly punished for their results.

"I know everybody's focused on Walmart and Target," which spooked investors when they plummeted on weak results last week, "but let's focus on something like TJX that actually delivered and raised their margin guidance," Hightower Advisors chief investment strategist Stephanie Link said Wednesday on CNBC's "Squawk Box."

"Services and high end are actually still doing pretty good," she added, noting Ralph Lauren's top- and bottom-line beats and positive performance in Nordstrom's designer and shoe business that "helped comps because people wanted to buy things for occasions."

Elsewhere, Intuit jumped more than 7% after the tax software company reported better-than-expected quarterly profit and revenue, and raised its current quarter outlook. Tech stocks led market losses in the previous session, following a warning of slowing growth from social media company Snap.

Homebuilder Toll Brothers also posted quarterly results that beat analyst expectations, sending the stock up more than 3%. Lennar, D.R. Horton and Pultegroup were also among the S&P 500's top gainers Wednesday.

Traders will continue to parse through earnings reports this week to see how companies are handling inflationary pressures. Snowflake and Nvidia are set to post quarterly reports after the bell. Costco will report on Thursday.