Stocks rallied Wednesday afternoon after Federal Reserve Chairman Jerome Powell hinted that the central bank would eventually slow the pace of its interest rate hikes.
Stocks were already up to start the session, rising a day after Alphabet and Microsoft posted strong quarterly growth in certain businesses. After the Fed concluded its two-day meeting, all of the major averages extended those gains.
The Fed raised interest rates by 0.75 percentage point, as was widely expected. Investors were keen to learn about future rate increases, however. Powell left the door open about the size of a likely September rate hike, but he also said that down the road "it likely will become appropriate to slow the pace of increases." That will depend on economic data.
Stocks rallied during Powell's remarks as investors' worries about out-of-control inflation and recession risk softened a bit. Earnings season is in full swing this week with just over a third of the S&P 500 reporting their quarterly results. Many companies so far have cited inflation-related challenges in their performance or forward-looking guidance.
Retail stocks, which were hit hardest in the previous session on inflation concerns, cut some losses after the Fed decision.
Tech stocks pushed the Nasdaq higher, as Microsoft and Alphabet leapt about 6.6% and 7.6%, respectively. Meta Platforms jumped more than 6%, Amazon gained 5.3%, and Apple advanced 3.4%.
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