U.S. stocks advanced Wednesday in choppy trading after the Federal Reserve kept U.S. interest rates unchanged in a move that was widely expected by market participants.
Late in the session, stocks rallied as chipmakers jumped after Bloomberg reported President Donald Trump's administration plans to rescind artificial intelligence chip curbs put in place during the Biden administration.
Earlier, the Fed kept rates steady, with the central bank saying the risks of both higher inflation and unemployment had risen, further clouding the economic outlook as the Fed grapples with the impact of Trump's tariff policies.
After a brief move lower following the statement, stocks reversed course. Trading remained volatile throughout the session.
"Clearly, the statement is trying to send a message to the White House that their recent actions have made the economic environment more difficult," said Ellen Hazen, chief market strategist at F.L. Putnam Investment Management in Lynnfield, Massachusetts.
"They're saying that the risk of higher unemployment has risen, the risk of higher inflation has risen. And they didn't specifically attribute it to the tariffs, but I think anybody looking at that is going to understand that that's what they mean."
According to preliminary data, the S&P 500 gained 22.84 points, or 0.41%, to end at 5,629.75 points, while the Nasdaq Composite gained 45.43 points, or 0.26%, to 17,735.09. The Dow Jones Industrial Average rose 274.69 points, or 0.67%, to 41,103.69.
The Dow was boosted by a jump in Disney shares after the streaming firm's quarterly results topped Street expectations.
In comments following the statement, Fed Chair Jerome Powell acknowledged< uncertainty has sourced sentiment among people and businesses, but the economy itself is still healthy.
In addition, he said rate cuts are possible if they were supported by economic data but the central bank cannot make preemptive policy changes until there is more clarity from the data.
Markets are still largely pricing in a rate cut of at least 25 basis points from the Fed at its July meeting, according to LSEG data.
The three main indexes were initially higher in early morning trading, a day after Washington announced that representatives of the two countries would meet over the weekend in Switzerland for ice-breaker trade discussions following weeks of tit-for-tat tariffs between the U.S. and China.
The Trump administration has said potential deals with major trading partners are underway, but markets have yet to see talks bear fruit.
But Trump said shortly before the Fed statement he was not open to pulling back the 145% tariffs that had been announced, which some analysts attributed to the brief pullback in stocks.
Markets have been whipsawed in recent weeks since the announcement of the tariffs in early April, with the S&P 500 dropping nearly 15% in the days after, only to recover nearly all of the declines.
During most of the session, the Nasdaq was lower in part due to a drop in Google-parent Alphabet, which also served to pull the S&P 500 communication services sector down as the worst performer on the session.
A report said iPhone-maker Apple was exploring the option of adding artificial-intelligence search options to its web browser, citing an executive. Apple's shares also ended lower.
Uber declined as the ride-hailing company missed quarterly revenue expectations.
CrowdStrike stumbled after the cybersecurity company reiterated its fiscal 2025 and 2026 forecasts and announced a plan to cut jobs.
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