Wall Street Gains as Bond Market Eases Post-Fed Decision

U.S. stocks surged on Wednesday following the Federal Reserve’s announcement that the economy remains robust enough to maintain current interest rates. Wall Street was further buoyed by decreasing yields in the bond market.
The S&P 500 increased by 1.1%, while the Dow Jones Industrial Average saw a rise of 383 points, or 0.9%. Meanwhile, the Nasdaq composite climbed 1.4%.
This upward trend came after weeks of dramatic fluctuations in the U.S. stock market. Significant uncertainty persists regarding how much economic discomfort President Donald Trump is willing to endure in order to reshape the system, especially with his intentions of bringing manufacturing jobs back to the country and reducing the federal workforce.
Trump’s numerous pronouncements on tariffs and other policies have cast uncertainty on the market, sparking concerns among economists that this could lead businesses and households in the U.S. to reduce or freeze spending.
Federal Reserve Chair Jerome Powell acknowledged the increasing pessimism among U.S. consumers and businesses, as reflected in recent surveys. However, he also highlighted data pointing to the economy’s current stability, such as the low unemployment rate. He noted that even during times of economic pessimism, consumers might still make substantial purchases, like buying new cars.
Powell remarked, “Given where we are, we think our policy is in a good place to react to what comes, and we think that the right thing to do is to wait here for greater clarity about what the economy’s doing.”
This year, the Federal Reserve has kept interest rates steady after substantial reductions last year. While lowering rates can provide an economic lift, it can also drive inflation upward.
Fed officials conveyed that they still anticipate two cuts to the federal funds rate by the year’s end, as previously predicted. However, they are also expecting slower growth and higher inflation in the U.S. economy. The overarching sentiment from the Fed was the pervasive uncertainty affecting everything.
Powell commented on the predictions for two rate cuts by stating, “It’s really hard to know how this is going to work out.” He dismissed fears of “stagflation,” a situation where the economy stagnates while inflation remains high, a combination that the Fed has limited tools to address. The last occurrence of this phenomenon was in the 1970s, and Powell reassured, “I wouldn’t say we’re in a situation that’s remotely comparable to that.”
Contributing to the stock boost were lower yields from Treasurys in the bond market. Lower interest returns from Treasurys often encourage investors to pay higher prices for stocks.
The yield on the 10-year Treasury decreased to 4.24% from 4.31% just before the Fed made its announcement. Additionally, the Fed plans to start trimming the monthly reductions of its Treasury holdings beginning in April, aiming to keep longer-term yields lower than they might be otherwise.
Powell reiterated that this adjustment was more of a technical move rather than an indication of forthcoming policy changes, stating, “It isn’t sending a signal in any hidden way.”
Yields for shorter-term Treasurys also declined as traders speculated on potential rate cuts. They anticipate as many as three cuts by year-end, with the likelihood now at 55%, up from 44% the previous day, based on CME Group data.
Among the stocks, Nvidia was a positive force, rising 1.8% and trimming its losses for the year to 12.5%. It hosted an event where it effectively countered beliefs of a slowdown in demand for AI-related computing power.
Tesla also gained 4.7% after suffering two consecutive losses. Despite this, the company remains down 41.6% for 2025, amid concerns about CEO Elon Musk’s cost-cutting measures in federal spending.
Conversely, General Mills declined by 2.1% after reporting quarterly profits that exceeded analyst expectations. Nonetheless, its revenue fell short due to a slowdown in snack sales, prompting a downward revision of its full fiscal year forecasts, attributed to ongoing “macroeconomic uncertainty.”.
Overall, the S&P 500 rose by 60.63 points to 5,675.29. The Dow Jones Industrial Average climbed by 383.32 to 41,964.63, and the Nasdaq composite increased by 246.67 to reach 17,750.79.
Globally, Japan’s Nikkei 225 dipped by 0.2% following the Bank of Japan’s decision to maintain its interest rates, as was widely anticipated. Japan also recorded a trade surplus for February, with exports growing over 11% as manufacturers rushed to preemptively ship goods before Trump’s tariffs took effect.
In Europe and Asia, other stock market indexes showed mixed results.