The Nasdaq soared 2.43% and the S&P 500 jumped 1.64%, Wednesday, as investors hoped for hints from the Federal Reserve on the timing of rate cuts, a bullish forecast from AMD boosted chip stocks and Microsoft slipped after a higher spending forecast.

Both the S&P 500 and the Nasdaq hit one-week highs and were on track to log their biggest one-day gains since February.

Advanced Micro Devices climbed 5% after lifting its 2024 forecast for AI-chip sales, helping Nvidia jump 12%.

The Philadelphia SE Semiconductor index rose 5%, set for its biggest one-day gain since May 2023, but on track for its worst month since October 2023 after the recent chip stocks rout.

"In many cases, chip stocks are overvalued at this point. There may be some room for them to run here, but then again they're not going to be able to maintain that pace," said Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest.

Investors also parsed a Reuters report on the Biden administration's plans to expand U.S. powers to stop exports of semiconductor manufacturing equipment to Chinese chipmakers.

Microsoft lost 1.3% on plans to spend more this fiscal year to build its AI infrastructure - another sign that the payoff from hefty investments in the technology could take longer than hoped.

Among megacaps, Meta jumped 2% ahead of its results, due after markets close. Apple and Amazon.com , which will report earnings on Thursday, gained 1.7% and 3%, respectively.

The S&P 500 Technology index jumped 3%, leading broad-based sectoral gains.

At 12:51 p.m. EST, the Dow rose 290 points, or 0.71%; the S&P 500 gained 89 points, or 1.64%; and the Nasdaq Composite gained 417 points, or 2.43%.

Wall Street's fear gauge dipped to a one-week low, signaling improved investor sentiment.

Tech and chip stocks took a hit this month after prompting a record-breaking Wall Street run in 2024, on enthusiasm surrounding AI adoption and the prospect of early interest-rate cuts.

Results from Alphabet, Tesla and Microsoft failed to thrill. Investors are questioning if the AI-driven rally has run its course and are rotating to underperforming sectors.

The small-caps Russell 2000 index and the blue-chip Dow are on track for their best month this year.

Helped by the day's gains, the S&P 500 was on track to a monthly advance, while the Nasdaq recouped most of the ground it lost this month.

All eyes are on the Fed's decision and commentary on rates later in the day. The central bank is expected to hold rates steady and open the door for a September rate cut.

With traders fully pricing in a September cut, according to CME's FedWatch, any disappointment on this front could amplify the recent equity selloff, analysts fear.

Data showed a lower-than-expected rise in U.S. private payrolls in July, but that might not be a true reflection of the labor market, which continues to moderate gradually.

Among others, Boeing climbed 3% after naming aerospace industry veteran Kelly Ortberg its new president and CEO, while Mastercard gained 3% after upbeat second-quarter profit.

Advancing issues outnumbered decliners by a 3.13-to-1 ratio on the NYSE, and by a 1.93-to-1 ration on the Nasdaq.

The S&P 500 recorded 58 new 52-week highs and one new low, while the Nasdaq posted 85 new highs and 79 new lows.