NEW YORK – U.S. stock indexes are rising Wednesday after the Federal Reserve kept its main interest rate steady, as was widely expected, and signaled a move that could keep longer-term interest rates lower.
The S&P 500 was up 0.8% in afternoon trading, rising a bit following the Fed’s announcement. The Dow Jones Industrial Average was up 210 points, or 0.5%, as of 2:20 p.m. Eastern time, and the Nasdaq composite was 1.2% higher.
The relatively quiet trading provides a respite following weeks of sharp and scary swings for the U.S. stock market. Uncertainty is high about how much pain President Donald Trump will allow the economy to endure in order to remake the system as he wants. He’s said he wants manufacturing jobs back in the United States and far fewer people working for the federal government.
Trump’s barrage of announcements on tariffs and other policies have created so much uncertainty that economists worry U.S. businesses and households may freeze and pull back on their spending.
Against such a cloudy backdrop, the Fed decided to wait and see how conditions play out before making its next move on interest rates. Lower rates would give the economy a boost, but they could also push up inflation when worries are already high about it because of tariffs.
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 U.S. 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 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.
By reinvesting more in Treasurys each month, the Fed will essentially be helping to keep longer-term yields lower than they would otherwise be.
The yield on the 10-year Treasury dropped to 4.27% from 4.31% just before the Fed announced its decision.
On Wall Street, Nvidia helped support the market after rising 2.8% to cut its loss for the year so far to 11.6%. 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 also rose 3.6%, following two straight losses of roughly 5%. It’s still down 42.2% for 2025 so far. It’s been struggling on worries that customers are turned off by CEO Elon Musk’s leading efforts to slash spending by the U.S. government.
Big Tech has generally been at the center of the market’s recent sell-off, as stocks whose momentum had earlier seemed unstoppable have since dropped sharply following criticism they had simply grown too expensive.
On the losing side of Wall Street Wednesday was General Mills, which fell 2.2% despite reporting a stronger profit for the latest quarter than analysts expected.
The cereal and snack maker’s revenue fell short of analysts’ targets, in part because of a slowdown in sales for snacks. General Mills also cut forecasts for revenue and profit over its full fiscal year, partly because it expects “macroeconomic uncertainty” to continue to affect its customers.
In stock markets abroad, Japan’s Nikkei 225 slipped 0.2% after the Bank of Japan held steady on its own interest rates, as was widely expected. Japan also reported a trade surplus for February, with exports rising more than 11% as manufacturers rushed to beat rising tariffs imposed by Trump.
Other indexes were mixed across Europe and Asia.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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