Stocks rose Wednesday, with the S&P 500 topping the 5,200 level and hitting a new intraday high after the Federal Reserve held rates at a 23-year high and maintained expectations for three cuts before the end of 2024.
The S&P 500 and Nasdaq Composite gained 0.7% and 1%, respectively. The Dow Jones Industrial Average added 345 points, or 0.9%, to hit a record high. The Nasdaq also headed for a record close.
The Fed left rates unchanged but said that it plans to cut three times before the end of the year, reaffirming its previous forecast updated in December. That said, the central bank indicated that it needs greater evidence that inflation is easing to initiate those cuts.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the central bank said.
Prior to the meeting, some investors had feared that a recent spate of hot inflation reports would potentially result in even fewer cuts than markets anticipated.
“We had some inflation bumps this year but Jerome Powell’s not blinking,” said David Russell, global head of market strategy at TradeStation. “Investors are relieved to see three cuts stay in the dot plot, supporting markets and risk appetite. The Fed might wake up with a hangover, but the punchbowl isn’t going away yet.”
Financial stocks were higher after the Fed decision on the hope that rate cuts this year will keep the economy growing. American Express added more than 1%, while the SPDR S&P Regional Banking ETF gained 1.3% as regional bank stocks bid higher.
Megacap technology stocks that have powered recent market rally rose as investors bet the sector stands to gain the most from lower rates. Alphabet, Amazon, Microsoft and Nvidia added about 1% each, while Meta Platforms gained 2%. Recent market laggards Apple and Tesla edged up 1% and 2%, respectively.
Investors monitored Fed Chairman Jerome Powell’s press conference for more insight into the economy, inflation and the path ahead for cuts.
In other news, Chipotle Mexican Grill gained more than 3% after announcing a stock split, while Signet Jewelers tumbled 11% after issuing disappointing first-quarter revenue guidance.
