By Chuck Mikolajczak

NEW YORK (Reuters) - A gauge of global stocks rose and the U.S. dollar and Treasury yields were lower on Wednesday after the Federal Reserve raised its target interest rate by the expected 25 basis points but communicated more increases were on the horizon.

The Fed said the U.S. economy was enjoying "modest growth" and "robust" job gains, with policymakers still "highly attentive to inflation risks" as it seeks to tighten financial conditions and reign in high prices. Markets have been pricing in the possibility of a rate cut by the Fed in the back half of the year.

On Wall Street, U.S. stocks were choppy after the Fed announcement but rebounded to turn positive as Chair Jerome Powell began to speak.

"The key thing the Fed is focused on is wages and we are seeing wage inflation continue to ameliorate if you look at both average hourly earnings and the employment cost index which just came out, wages are beginning to soften, but they are not softening enough to get inflation down to that 2% target," said Ellen Hazen, chief market strategist at F.L.Putnam Investment Management in Wellesley, Massachusetts.

"They had a very slightly dovish change in the language where they previously had talked about determining the pace of future increases and now they are talking about determining the extent of future increases."

Investors will now closely eye comments from Fed Chair Powell for further signals on the path of the central bank's policy.

The Dow Jones Industrial Average fell 5.45 points, or 0.02%, to 34,080.59, the S&P 500 gained 30.83 points, or 0.76%, to 4,107.43 and the Nasdaq Composite added 173.22 points, or 1.5%, to 11,757.77.

Before the policy announcement, economic data painted a mixed picture, with a labor market that remains strong while manufacturing activity continues to weaken, showing contraction for a third straight month.

Investors have viewed a weaker labor market as a key component to bring down stubbornly high inflation.

Earnings season also continues to roll on, with Facebook owner Meta reporting earnings after the closing bell on Wednesday. Later in the week will bring earnings from names such as Apple and Amazon.

Early gains for European shares faded to close virtually unchanged ahead of the Fed statement, although industrial stocks, up 0.85%, were a bright spot. On the heels of the Fed, the European Central Bank (ECB) and Bank of England will make their policy statements on Thursday, in which each is largely expected to hike by 50 basis points.