us stocks edged up wednesday in choppy trading as traders eyed the difficult choice facing the federal reserve of whether to prioritize fighting inflation or banking sector stability on tuesday the dow jones industrial average rose 316 points or 098 to 32561 the sp 500 increased 51 points or 13 to 4003 and the nasdaq composite gained 185 points or 158 to 11860 attention is focused on the federal reserves interest rate decision due at 2 pm eastern fed chair jerome powell will hold a press conference half an hour later futures markets are pricing in an 89 probability of a 25 basis point hike in the fed funds rate to a range of 475 to 5 however that high level of conviction belies the intense uncertainty over monetary policy in recent weeks as investors have tried to gauge how the central bank will navigate the need to maintain the battle against inflation which is still running at three times its 2 target with a desire not to pile further interest rate pressure on a fragile banking sector see feds forecasts seen diverging from market over future path of interest rates therell be plenty of focus on whether the fed hikes today but just as important will be how theyre looking at the current turmoil and whether they still expect any more rate hikes after today said henry allen strategist at deutsche bank our us economists think that the european central banks decision last week offers a relevant blueprint for the fed raise rates in line with expectations drop forward guidance but signal a continued tightening bias allen added the fed will be looking to gather information from the market reaction especially on the inflation expectations front as powell speaks at the press conference said brent schutte chief investment officer at northwestern mutual wealth management company if there is a commentary about potentially pausing rate hikes and seeing what happens what happens to those inflation expectations do they rise if they did i think the fed would be worried if they dont i think theyll take some comfort that the market is kind of on the same page said schutte the sp 500 index closed on tuesday above the level seen before the banking crisis began with news of troubles at silicon valley bank just two weeks ago the benchmark index is again back in the middle of its fourmonth trading range between 3800 to 4200 investors have welcomed easing tensions in the financial sector while hoping the subsequently tighter credit conditions will help slow the economy and thereby bring forward the time when the fed can start cutting borrowing costs again still the difficulty of the challenge facing central banks was highlighted by inflation data in the uk which showed price rises accelerating again and remaining in double digits the bank of england will deliver its rate decision thursday as inflation remains well above the boe target theres now a stronger case for the boe to press ahead with a rate hike even in a period of greater financial market uncertainty said richard flax chief investment officer at moneyfarm it will be interesting to see how the boe and the fed consider the dynamics between fighting inflation and managing financial stability the ecb has already indicated that it sees no contradiction between those two goals flax added this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal