Stocks rebound led by Microsoft ahead of Fed update, Dow adds more than 300 points

U.S. stocks rebounded Wednesday after a strong quarterly report from Microsoft as investors await results from a Federal Reserve meeting expected to set the tone for 2022.

The Dow Jones Industrial Average climbed 355 points, or 1%. The S&P 500 added 1.6%. The Nasdaq Composite gained 2.4%.

Shares of Microsoft rose 4.9% after the company issued better-than-expected quarterly revenue guidance, boosting the three major indexes.

Microsoft's "conference call went well and ignited the market," Scott Redler of T3Live said. Whether the stock's rally holds "will tell us a lot about tech," he added.

Technology shares gained following Microsoft's earnings report. Apple, Amazon, Netflix and Nvidia all traded higher. Tesla shares added 3.7%, with the electric vehicle marker slated to report earnings after the bell.

Corning popped 13.3%, the top gainer on the S&P 500, after the company's quarterly earnings and revenue topped Wall Street estimates.

On the downside, Boeing fell 3.4% after the aircraft maker reported positive cash flow for the first time since 2019, but it took a $3.5 billion pre-tax charge on its 787 Dreamliner program.

The Fed is set to conclude its two-day policy meeting Wednesday and make an announcement in the afternoon. The central bank is not expected to make any policy changes, but investors will look for clues on when — and by how much — the Fed will raise interest rates later this year. Market participants will also look for hints on further steps the Fed will take to unwind pandemic-era aid.

Recent market volatility is unlikely to deter the Fed from implementing as much as four or more interest rate hikes this year, market strategists say.

"It's premature to assume the latest volatility and weakness, in and of itself, will cause the Fed to blink (e.g., adjust the narrative)," Liz Ann Sonders, Charles Schwab chief investment strategist, said in a note.

U.S. stocks are coming off a second consecutive roller-coaster trading session.

The Dow ended Tuesday lower, but was down as much as 818.98 points on the session and briefly traded up by as much as 226.54 points. Those moves came a day after the Dow recovered from a 1,115-point deficit to post a slight gain.

The S&P 500 and Nasdaq Composite also closed well off their session lows on Tuesday, but still lost 1.2% and 2.3%, respectively.

"We're in a tightening regime," BlackRock's Rick Rieder told CNBC's "Squawk Box" on Wednesday. "Interest rates are going to trend higher. ... Volatility is going to be higher."

Treasury yields have jumped sharply to start the year in anticipation of tighter monetary policy from the Fed. The benchmark 10-year yield stood around 1.78% on Wednesday.

All three major indexes are negative in January. The Nasdaq is in correction territory, down more than 14% from its intraday high.

—CNBC's Patti Domm contributed to this report.