Dow closes higher as Powell says Fed’s next move is unlikely to be a hike: Live updates

The Dow Jones Industrial Average closed higher on Wednesday after Federal Reserve Chair Jerome Powell largely ruled out that the central bank’s next move could be a hike, easing investor worries that it was losing control of sticky inflation. The broader market finished lower, however, with losses from chipmakers dragging down the S&P 500.

The Dow added 87.37 points, or 0.23%, to close at 37,903.29. The S&P 500 lost 0.34% to close at 5,018.39, while the Nasdaq Composite slid 0.33% to settle at 15,605.48.

It was a volatile day for the major averages, with the 30-stock Dow rallying more than 530 points at its session high, spurred by Powell’s comments. At one point, the S&P 500 was up 1.2%, while the Nasdaq climbed more than 1.7%.

The central bank opted to hold rates steady, citing a “lack of further progress” in bringing inflation back down toward its 2% goal. However, Powell ruled out the likelihood of a hike in a press conference following the decision.

“I think it’s unlikely that the next policy rate move will be a hike,” he said. “I’d say it’s unlikely.”

Investors also reacted positively to the Fed saying it would tap the brakes on one way it tightens conditions for financial markets. Starting in June, the central bank said it will slow the pace at which it allows maturing bond proceeds to roll off its balance sheet without reinvesting them. This is a process known as quantitative tightening.

“The fact that inflation remains elevated means we’re not going to see rate cuts very soon,” said Sonu Varghese, global macro strategist at Carson Group. “At the same time, they are going to slow the pace at which they shrink their balance sheet (their massive bond portfolio), which will likely put less upward pressure on bond yields.”

The 10-year Treasury yield briefly dropped below 4.6% following Powell’s comments, alleviating some investor fears that it may jump back above 5% this year and restrict the economy.

But stocks tied to artificial intelligence struggled during Wednesday’s session, following disappointing reports from some top AI contenders. Advanced Micro Devices tumbled 8.9% after issuing an in-line current-quarter revenue forecast, while Super Micro Computer slid 14% on light revenue.

Wall Street is coming off a losing month, with the S&P 500 and the Nasdaq posting losses of more than 4%. The Dow fell 5% for its worst monthly performance since September 2022.