Stocks Experience a Relief Rally in their Best FOMC Day since July – US Market Wrap

Stocks rose and bond yields fell after Jerome Powell assured investors that the Federal Reserve saw no need for drastic action in response to tariffs and their impact on inflation.

After central bankers maintained monetary policy as expected, Powell was cautious in his assessment of how Donald Trump’s trade war might shape the economy, citing the possibility that tariffs’ impact on consumer prices would be “transitory.” The jump in stocks, the largest for any Fed day since July, comes after a bruising four-week period in which the S&P 500 fell into a correction. Treasuries experienced an abrupt reversal, with two-year yields falling below 4%.

Fed officials kept their benchmark interest rate unchanged for the second straight meeting, citing growing concerns that the economy is slowing and inflation may remain stubbornly high. The Fed also announced that starting in April, it will reduce the monthly cap on the amount of Treasuries on its balance sheet that can mature without being reinvested to $5 billion from $25 billion.

The S&P 500 increased by 1.1%. The Nasdaq 100 rose 1.3%. The Dow Jones Industrial Average rose 0.9%.
The yield on 10-year Treasuries fell four basis points to 4.25%. The dollar’s gains were limited to 0.2%.