The stock market rallied on Wednesday, with major indices recouping some of the losses suffered since late February. The Dow Jones Industrial Average rose 383.32 points, or 0.92%, to close at 41,964.63. The S&P 500 gained 1.08% to finish at 5,675.29, and the Nasdaq Composite jumped 1.41% to settle at 17,750.79.
The Federal Reserve’s decision to keep interest rates steady and forecast two rate cuts in 2025 injected optimism into the market. Fed Chair Jerome Powell emphasized the strength of the economy, stating, “Labor market conditions are solid, and inflation has moved closer to our 2% longer-run goal, though it remains somewhat elevated.”
Investors reacted positively to the Fed’s outlook, as it provided clarity amid ongoing economic uncertainties. Powell also indicated that any inflationary effects from tariffs would likely be short-term, offering additional comfort to the markets.
Michael Green, chief strategist at Simplify Asset Management, said, “The most important thing to recognize is that the information that came across was almost exactly what people had expected. We’ve now had two consecutive summers in which inflation has been much weaker than expected, and two consecutive winter and spring periods in which inflation has been higher.”
Wednesday’s session saw significant gains in cyclical sectors following Powell’s comments. The financial sector climbed 1.3%, industrials rose 1.5%, and the energy sector gained 1.9%, according to FactSet.
s&p 500 gains on Fed clarity
Jeffrey Roach, chief economist at LPL, warned of stagflation risks due to policy uncertainties and upcoming tariff impacts. “As growth prospects falter and inflation remains sticky, we should expect investors to get more worried about stagflation,” Roach said.
In other financial news, consumer staples appear to be gaining momentum relative to the broader market. Wolfe Research technical analyst Rob Ginsberg noted that the sector is breaking out following a two-year downtrend, suggesting potential gains for investors focused on this area. Venture Global’s stock rose nearly 2% after the Department of Energy approved its LNG export project in Cameron Parish, Louisiana.
This aligns with President Trump’s “energy dominance” agenda, although the company has faced investor disappointment with its stock falling significantly earlier this year. Midday trading also saw noticeable movements among individual stocks. Design software maker Autodesk, Nvidia, and Boeing were among the notable movers.
Overall, investor sentiment remained cautiously optimistic as they digested the implications of the Federal Reserve’s latest policy decisions and economic forecasts.
