The Dow Jones Industrial Average rose 305.28 points, or 0.86 percent, to 35,768.06. The S&P 500 was up 65.64 points, or 1.45 percent, to 4,587.18. The Nasdaq Composite Index increased 295.92 points, or 2.08 percent, to 14,490.37.
All of the 11 primary S&P 500 sectors ended in green, with communication service, real estate and technology up 2.45 percent, 2.38 percent and 2.31 percent, respectively, leading the gains.
"U.S. stocks finished higher in another broad-based rally Wednesday as tech-related shares extended their recovery ahead of tomorrow's key inflation update," said Wells Fargo Advisors in a note on Wednesday.
The yield of U.S. 10-year Treasury dipped 1.7 basis points to 1.947 percent as market expectation of inflation in January softened.
Remarks from regional reserve bank presidents also helped support bond prices, as they suggested inflationary pressures should ease later this year, according to Wells Fargo Advisors.
U.S. economy may be nearing a turn lower in inflation, said Raphael Bostic, president of the Federal Reserve Bank of Atlanta, on Wednesday.
The United States is scheduled to issue consumer price index (CPI) data for January 2022 on Thursday morning.
The CPI for January would expand 7.3 percent year on year, according to consensus of market forecasts.
There is no "compelling case to start with a 50-basis-point" rate hike by the Federal Reserve, said Loretta Mester, president of the Federal Reserve Bank of Cleveland, on Wednesday.
Speaking at an on-line event organized by the European Economics and Financial Centre, Mester said inflation could fall back to above 2 percent later this year as some of supply constraints are removed and the Fed works to eliminate stimulus and tighten monetary policy.
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