US stocks bounced on Wednesday after the US Federal Reserve left its key interest rate unchanged but hinted it would reduce borrowing costs by half a percentage point by the end of the year.
Gold flipped positive, touching a record high, and US Treasury yields pared gains after the central bank lowered its economic outlook for the year and marked up its inflation expectations in view of US President Donald Trump’s tariff rollouts.
All three major US stock indexes gained upward momentum after the announcement, with tech-related megacaps boosting the Nasdaq to a 1.4% advance on the day.
“Given growing worries around tariffs and how they could affect US growth and inflation, the Fed took a widely expected ‘wait and see’ approach on rates,” said Matthias Scheiber, head of the multi-asset solutions team at Allspring Global Investments in London.
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“We believe the next likely window for the Fed to lower rates will be May or later, and market analysts expect two cuts in 2025.”
At his subsequent Q&A session, Fed Chair Jerome Powell acknowledged inflation is still elevated and uncertainties related to policy changes persist, but he provided reassurance that the economy remains strong and the labor market is solid.
International investors had been focused on Turkey after President Tayyip Erdogan’s main political rival was detained in what the main opposition party called “a coup against our next president,” battering Turkish stocks and sending the lira plunging as much as 14.5% against the dollar, before paring those losses.
Ukrainian President Volodymyr Zelenskiy spoke with US President Donald Trump on Wednesday, with the leaders agreeing to work to end the war in Ukraine.
“We live in such a global society, there’s always going to be something happening out there in the world,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “But long-term investors, I believe, have the ability to kind of look through some of that day-to-day noise.”
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The Dow Jones Industrial Average rose 383.32 points, or 0.92%, to 41,964.63, the S&P 500 gained 60.63 points, or 1.08%,
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