The Federal Reserve kept interest rates steady on Wednesday but signaled it expects to cut rates twice in 2025. The Dow Jones Industrial Average climbed 383.32 points, or 0.92%, to close at 41,964.63. The S&P 500 gained 1.08% to end at 5,675.29, and the Nasdaq Composite advanced 1.41% to settle at 17,750.79.
Fed Chair Jerome Powell stated, “The economy is strong overall and has made significant progress toward our goals over the past two years. Labor market conditions are solid, and inflation has moved closer to our 2% longer-run goal, though it remains somewhat elevated.”
The Fed’s decision comes amid rising trade tensions between the U.S. and major partners. President Donald Trump recently imposed tariffs on goods from Canada, Mexico, and China, all of whom have retaliated.
Cyclical sectors responded positively to Powell’s remarks.
Fed signals rate cuts in 2025
The financial sector rose 1.3%, industrials by 1.5%, and the energy sector gained 1.9%.
Consumer staples also showed momentum. LPL chief economist Jeffrey Roach warned of the growing threat of stagflation. He predicted core inflation would decelerate by the summer, potentially followed by rate cuts in the Fed’s June meeting.
Shares of liquified natural gas producer Venture Global rose nearly 2% after receiving approval for a new export project. Boeing, Nvidia, and Autodesk made notable moves in midday trading. The market closed higher on a day full of significant economic signals and investor reactions.
Traders are keeping a cautious eye on the coming months of potential policy and economic shifts.
