By Mike Tyler (TheStreet.com)

Stocks in the U.S. continued to trade higher Wednesday afternoon as traders bid up equities on a surprising rise in crude inventories and in anticipation of the conclusion of the Federal Reserve's two-day policy meeting.

The Dow Jones Industrial Average was up 49 points at 11,854, and the S&P 500 was adding 11 points to 1325. The Nasdaq was up 36 points at 2404.

At 2:15 p.m. EDT, the Fed will announce its latest decision, if any, on rates. Most observers aren't expecting any moves, but they will be closely examining the accompanying statement that could reveal the central bank's focus going forward.

Currently, the fed funds futures rate is 2%, a level achieved after a months-long easing campaign in the wake of the credit crisis that dropped the overnight lending rate from 5.25% last summer. The Fed has been stuck between keeping the mortgage meltdown from dragging the economy into a recession and dealing with worries about commodity-driven price inflation.

While the Fed has moved aggressively to lower borrowing costs, most experts believe no further rate reductions are forthcoming, and that instead, the next change, when it does occur, will be a hike.

Earlier, European Central Bank President Jean-Claude Trichet signaled that ECB officials could be close to lifting rates on the continent in a bid to cool off inflation there.

Chip Hanlon, president of Delta Global Advisors, said that the market has priced in its expectation that the Fed will remain on the sidelines. "It would take a surprise from the Fed to move the market," he said. "I think today is more about oil."

Crude oil inventories increased by 803,000 barrels, compared with expectations for a decline of 1.1 million barrels. The price of oil was falling $3.95 to $133.05 a barrel. Gold was shedding $10 at $881.60 an ounce.

The energy sector was mostly lower. XTO Energy (XTO) and Chesapeake Energy (CHK) were among the biggest decliners, each losing at least 4%.

On the other hand, transportation stocks were on the rise as crude prices dropped. Airlines such as Continental (CAL ), United parent UAL (UAUA) and American's AMR (AMR) were posting gains of at least 4%.

Among companies in the headlines, MasterCard (MA) agreed to pay $1.8 billion to settle litigation brought by American Express (AXP), which had alleged the company conspired to keep it out of the bank-issued credit card market. MasterCard was up about 5%, and American Express was trading even.

Staying in financials, Britain's Barclays (BCS), stung by the same financial slowdown that has deviled its U.S. counterparts, set plans to raise nearly $9 billion through a stock offering. Shares were recently up 5%, adding to a broad rally in the sector.

As for earnings, crop-science concern Monsanto (MON) said its third-quarter earnings jumped more than 40%, while revenue surged 26% to $3.59 billion. The company also raised its forecast again.

Cereal maker General Mills (GIS) wasn't as fortunate, saying its fourth-quarter profit dropped as the positive effects of commodity hedges wore off. Still, the numbers were in line with its preview issued last week.

After the close today, traders will take in financial results from Nike (NKE), Oracle (ORCL) and Research In Motion (RIMM).

The tech sector saw a broad rally as Jabil Circuit (JBL) forecast earnings that would beat the Street's expectations. Jabil shares were rising 17%. Nokia (NOK) also led the sector, up 6%.

Elsewhere, JPMorgan initiated ratings coverage on the pharmaceutical sector. It put a neutral rating on Wyeth (WYE ), Eli Lilly (LLY) and Bristol-Myers (BMY). Schering-Plough (SGP) garnered an overweight rating.

AT&T (T) saw shares rise on a Bernstein upgrade to outperform from market perform. Shares gained 2%.

Boeing (BA) fell 5% after Goldman Sachs downgraded the stock to sell.

On the data side, the Commerce Department said durable-goods orders were unchanged in May, whereas economists were looking for a decline of 0.5%. The U.S. Census Bureau and the Department of Housing and Urban Development also released May new-home sales. The government found that, as expected, new single-family homes sold at a seasonally adjusted annual rate of 512,000, down from 525,000 in April.

Stocks in the homebuilding space were generally upbeat. Lennar (LEN) and NVR (NVR) were gaining ground.

Treasury prices were on the decline. The 10-year note fell 22/32 in price to yield 4.17%. The 30-year was down 1 4/32 to yield 4.71%. The dollar gaining against the euro, the pound and the yen.

Abroad, markets were also climbing. London's FTSE added 0.6%, and Frankfurt's DAX gained 1.3%. The Paris Cac jumped 1.4%. In Asia, Japan's Nikkei lost 0.1%, and Hong Kong's Hang Seng was up 0.8%.