US stocks turn higher after Fed hints at slower rate hikes

Stocks bounced higher and Treasury yields fell sharply after the Federal Reserve indicated it might slow down the pace of its interest rate increases. The Fed also announced its fourth straight extra-large rate increase of three-quarters of a percentage point as it fights the worst inflation in decades.

The S&P 500 rose 0.52% as of 2:26 pm Eastern. The Dow Jones Industrial Average jumped 296.33 points, 0.91%,to 32,949.53 and the Nasdaq advanced 50.29 %.

The Fed’s hint Wednesday that it could ease back on the rate-increase program was welcome news for markets, which have been worried the Fed could slow the economy so much that it goes into a recession. The yield on the two-year Treasury fell sharply and the S&P 500 erased a loss and rose 0.6%.


The US central bank raised the benchmark borrowing rate by 0.75 percentage point -- the sixth hike this year -- in its all-out battle to tame inflation not seen since the 1980s.

The policy-setting Federal Open Market Committee (FOMC) signaled that more increases will be needed to tamp down rising prices but it will consider the impact on the economy when deciding on the pace of future moves -- opening the door to the possibility it will implement smaller steps in coming months.

The latest three-quarter percentage point increase takes the benchmark lending rate to 3.75-4.0 percent, the highest since January 2008.

(With inputs from Reuters)