Stocks Rise After Fed Keeps Rates Unchanged

Stocks climbed Wednesday after the Federal Reserve said the economy still looks healthy enough to keep interest rates where they are. Wall Street also got a boost from easing yields in the bond market.

• The S&P 500 rose 60.63 points, or 1.1%, to 5,675.29.
• The Dow Jones Industrial Average rose 383.32 points, or 0.9%, to 41,964.63.
• The Nasdaq composite rose 246.67 points, or 1.4%, to 17,750.79.

Fed officials indicated they still may cut rates twice by the end of this year, just as they were forecasting at the end of last year. But they are also penciling in weaker growth for the US economy and higher inflation than they were before. That raises fears about what's called "stagflation," where the economy stagnates but inflation remains high, the AP reports. The Fed doesn't have good tools to fix such a toxic combination.

Stocks nevertheless rose despite such warnings, as lower Treasury yields in the bond market eased some of the pressure. The Fed said it would begin paring the monthly reductions of its trove of Treasurys beginning in April. That means it will allow only up to $5 billion of its massive trove of Treasurys to mature each month, down from a prior cap of $25 billion. Fed Chair Jerome Powell said the move was more technical than a signal about coming changes in policy. He said it was the result of seeing "some signs of increased tightness in money markets." Powell warned of "tariff inflation" but said he doesn't see a return of stagflation, which the US economy suffered in the 1970s. "I wouldn't say we're in a situation that's remotely comparable to that," he said.

On Wall Street, Nvidia helped support the market after rising 1.8% to cut its loss for the year so far to 15%. It hosted an event Tuesday where it largely "did a nice job laying out the roadmap" and fighting back against speculation the artificial-intelligence industry is seeing a slowdown in demand for computing power, according to UBS analysts led by Timothy Arcuri. Tesla rose 4.7%, following two straight losses of roughly 5%. It's still down almost 40% for 2025 so far. On the losing side was General Mills, which fell 2.1% despite reporting a stronger profit for the latest quarter than analysts expected. (More stock market stories.)