U.S. stocks ended mixed on Wednesday, following Federal Reserve Chair Jerome Powell's press conference indicating that the Fed's next action is unlikely to be an interest rate hike.
The Dow Jones Industrial Average rose 87.37 points, or 0.23 percent, to 37,903.29. The S&P 500 sank 17.30 points, or 0.34 percent, to 5,018.39. The Nasdaq Composite Index shed 52.34 points, or 0.33 percent, to 15,605.48.
Six of the 11 primary S&P 500 sectors ended in red, with energy and technology leading the laggards by losing 1.60 percent and 1.26 percent, respectively. Meanwhile, utilities and communication services led the gainers by rising 1.14 percent and 0.84 percent, respectively.
The central bank chose to keep rates unchanged as expected, citing insufficient progress in lowering inflation.
However, stock prices rallied after Powell's press conference, where he dismissed the possibility of a rate hike. "I think it's unlikely that the next policy rate move will be a hike," he said.
The Fed has shifted to a wait-and-see mode and is prepared to keep its policy rate where it is for as long as needed, said a research note by Bank of America Global Research.
"Overall, we retain our view for a first rate cut in December on the idea that inflation will remain stickier and slower to come down. We still think the bar for rate hikes is high, and Powell seemed to corroborate that in his comments", said the note.
After the meeting, as per the CME FedWatch Tool, traders see a 39.3 percent chance rates will be cut by 25 basis points at the Fed's September gathering.
Meanwhile, investors responded positively to the Fed's announcement of a gradual slowdown in quantitative tightening, starting in June. This move indicates a more cautious approach to tightening financial market conditions by allowing maturing bond proceeds to roll off the balance sheet without immediate reinvestment.
"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.
Following Powell's remarks, the 10-year Treasury yield fell below 4.6 percent, easing concerns among investors about it potentially surpassing 5 percent and constraining economic growth. This development spurred afternoon gains, especially in major tech stocks sensitive to interest rates and risk sentiment, such as Microsoft and Alphabet. Amazon.com Inc. surged by 2.29 percent on the back of impressive first-quarter earnings and revenue, while Meta Platforms saw a rise of over 2 percent.
In March, the Labor Department's Job Openings and Labor Turnover Summary showed minimal change, with job openings totaling 8.488 million compared to 8.813 million in February, falling short of the expected 8.7 million.
Additionally, the Purchasing Managers' Manufacturing Index (PMI) for April registered at 50, slightly exceeding expectations of 49.9. Conversely, the manufacturing index from the Institute for Supply Management was reported at 49.2, below economists' forecast of 50.
